CRT December Pegasaus by Nik Yahya Nik Rushdi

Pegasus A newsletter for the Caux Round Table Network looking at business above the clutter and confetti _ Moral Capitalism At Work 6 West Fifth Street 300M Saint Paul, MN 55102 1.651.223.2863 www.cauxroundtable.org _ December 2012 Volume 2, Issue 12

Pegasus Stephen B. Young Global Executive Director, Caux Round Table

Introduction

Stephen B. Young Global Executive Director, Caux Round Table

Reflections on the Future of China

Excerpted from So Far From Home by Margaret J. Wheatley

Our Present World

Stephen B. Young Global Executive Director, Caux Round Table

Precursors of Moral Capitalism

INTRODUCTION

By advocating principles the Caux Round Table assumes that ideas shape decisions and decisions make for leadership. To expect leadership and not pay attention to ideas is to be foolish.

Margaret Wheatley in her recent book So Far From Home eloquently expresses fear and worry that our current civilization, supported by global capitalism, is having difficulty both shaping ideas and finding leaders.

Making a similar point somewhat cynically, Napoleon Bonaparte, Emperor of the French for a time, once concluded that “a revolution is an idea that has found bayonets”.

Finally, skepticism about the possibility of ever reaching a more moral capitalism keeps many from embracing new ways of thought about best business practices and so from stepping up to leadership in these times. Yet two of the more defeatist apologists for a brute capitalism – Andrew Carnegie and Thorstein Veblen – can be understood to have harbored aspirations for a more moral economic system than the one they lived in. Moreover, their aspirations echo the moral vision of a famous English American Puritan, John Winthrop. In his essay that defined the mission of America as aspiring to be a “City Upon A Hill”, Winthrop set forth the role of concern and moral engagement as central to that effort, even in its business endeavors.

China has become a great power; the Chinese people have a role to play in making contemporary history. What ideas stand behind their leadership? To ignore Chinese ideas is to diminish both their leadership capacity and the results they will achieve. Thus this issue of Pegasus brings you a summary of the seminal ideas animating the Chinese Communist Party as it directs the energies and resources of the Chinese people. One overlooked insight is that current Chinese Communist Party leaders are recycling old Chinese ideas about government, society and the natural order. To predict the future of China, and thus of our world, it is necessary to understand China’s past.

Stephen B. Young Global Executive Director

REFLECTIONS ON THE FUTURE OF CHINA STEPHEN B. YOUNG GLOBAL EXECUTIVE DIRECTOR, THE CAUX ROUND TABLE Under three generations of leaders now, the Chinese Communist Party has institutionalized its leadership practices, both for the Party and for the country. Central to such institutionalized practice is the setting forth of a guidance document – much like a large modern corporation has its Board of Directors adopt vision and mission statements and strategic initiatives to bring it closer to that vision through successful implementation of the mission. The corporate equivalent of the vision and mission statement for the Chinese Communist Party is the Political Report made to Party Congresses. Last November the 18th Party Congress was held and former General Secretary Hu Jintao gave such a report. He put two ideas at the center of the vision and mission of his Party: economic growth and promotion of Chineseness in government, the economy and society.

In Beijing, on November 8, 2012, Hu Jintao, then General Secretary of the Central Committee of the Communist Party of China, presented his political report to the 18th Congress of the Party. Former General Secretary Hu’s report is an important guide to future developments in China: economic, social and political. His views reveal a desire of the Chinese Communist Party to continue evolving into a political party that seeks to express the aspirations of an ethnic Chinese nationalism. China’s new General Secretary, Xi Jinping, in his address to the Political Bureau of the Communist Party of China during its meeting concluding on Nov 14, 2012, affirmed his personal commitment to the guidelines set forth by former General Secretary Hu. According to General Secretary Xi, the task of the Party is to build a “moderately prosperous society in all respects . . . and win new victories for socialism with Chinese characteristics.” These efforts, said General Secretary Xi, will “realize the great rejuvenation of the Chinese nation” in order “to let the Chinese nation stand more firmly and powerfully among all nations around the world and make a great contribution to mankind.”

The political system put in place by the Communist Party of China after the 1949 revolution depends on close alignment of all subordinate Party decisions and actions of Party members with the values and goals set forth by the Central Committee as ratified by the Party Congress. Governance of China by the Communist Party has become a compliance process, familiar to many multi-national corporations, as they seek to have all their employees and each subordinate part of the company follow and comply with policies and priorities set by the board of directors.

in specific functional areas. Neither individual discretion nor market allocations of resources are permitted to interfere with the logic of the administrative hierarchy of authorized command and control. In such systems, according to Weber, legitimacy of power comes from 1) the goals and objectives of the organization and their alignment with acceptable purposes, and 2) the rational connection of the work of each position and office of the bureaucracy with a stated goal or objective. The success of the system depends on the capacity of individual decision-makers to serve as directed, to be faithful agents of larger purposes.

Thus, any General Secretary’s report is more than rhetoric; it is the roadmap for a command and control structure of social mobilization using law and regulation to accomplish set and specific goals.

In his report former General Secretary Hu relies upon two systems of value and purpose to legitimate the Party’s mission. One is Communism as a social theory of justice and the other is traditional Chinese ethnic nationalism. The first is expressed as the goal of “achieving a moderately prosperous society in all respects” while the second is expressed as achieving the “great renewal of the Chinese nation.” The Party’s mission is to blend the two in one

This form of governance was famously defined by the German sociologist Max Weber as rational/legal or bureaucratic/formalistic. It depends on the thoughtful allocation of authority to different offices, each given specific areas of competence, so that subordinate centers of power can accomplish specific goals

program of national development.

traditional modality of Chinese ethnic pride as long contained within an historic metaphor of China as the “middle” kingdom central to all other nations and with 2) a divine naturalism which drives the tides of human affairs. Former General Secretary Hu added pointedly: “We must respond to the call of the times.”

Given the Party’s two principal goals of achieving a moderately prosperous society in all respects and of using socialism with Chinese characteristics to do so, we can now expect Chinese policies under the influence of the Party to demand actions to build economic prosperity and to promote Chinese ethnic identity and advantages.

Former General Secretary Hu numerous times mentions the necessity for China to develop institutions and polices “with Chinese characteristics.” “Socialism with Chinese characteristics”, he says, “will complete the building of a moderately prosperous society in all respects and achieve the great renewal of the Chinese nation.” He asserts that only socialism with Chinese characteristics can enable China to develop itself. Socialism in China must constantly enhance its “distinctive national features”.

Former General Secretary Hu said: “we are convinced that thanks to over 90 years of hard struggle, our Party has rallied and led the people . . . in turning the poor and backward old China into an increasingly prosperous and powerful new China and opening up bright prospects for the great renewal of the Chinese nation . . . We are all the more aware of the historic responsibility of the Party . . . We must aim higher and work harder and continue to pursue development in a scientific way, promote social harmony, and improve the people’s lives so as to complete the glorious and arduous tasks bestowed on us by the times.”

He refers to the “socialist system of laws with Chinese characteristics” and the development of Marxism in a Chinese context as the “system of theories of socialism with Chinese characteristics such as Mao Zedong Thought, Deng Xiaoping Theory, and the important thought of the Three Represents, initiated by former General Secretary Jiang Zeming, as well as the scientific outlook on development [his own contribution to socialism with Chinese characteristics].

He refers once in his remarks to the “dignity and glory of being Chinese.” Later he refers to the “superiority and vitality of socialism with Chinese characteristics which has “enhanced the pride and cohesiveness of the Chinese people and nation”.

Socialism with Chinese characteristics has the following aspects: 1)the political system of people’s congresses, multiparty cooperation and political consultation under the leadership of the Communist Party, regional ethnic autonomy, and community level self-governance; 2) socialist system of laws; 3) public ownership as the mainstay of the basic economic system developing along with economic entities of diverse ownership. These three systems function as an integral whole, each in harmony with the other two.

This mission of the Party as set forth by former General Secretary Hu is in keeping 1) with the

But, the former General Secretary added, “We must uphold the leadership of the Party.” It is

“the leadership core of the cause of socialism with Chinese characteristics”; it was founded “for the public good” and it exercises “state power for the people.” It must “coordinate the efforts of all”. The Party, accordingly, must “govern in a scientific, democratic way in accordance with the law.” The role of the Party is to “provide correct guidance” and “guide public opinion.”

mechanisms should be established to ensure that society is full of vigor, harmonious, and orderly.” He added that: “We should ensure that the people live and work in contentment, society is stable and orderly, and the country enjoys enduring peace and stability.” He then said: “We should create a social atmosphere in which work is honored and creation is lauded, and cultivate social trends of recognizing honor and disgrace, practicing integrity, encouraging dedication, and promoting harmony” and that “As long as the whole Party and all the people make concerted efforts, we can foster a dynamic environment in which everyone contributes to social harmony and benefits from a harmonious society.”

Underlying the harmonious workings of these sets of institutions is Chinese culture. Former General Secretary Hu affirmed that: “Culture is the lifeblood of a nation and it gives the people a sense of belonging. To complete the building of a moderately prosperous society in all respects and achieve the great renewal of the Chinese nation, we must create a surge in promoting socialist culture and bring about its great development and enrichment, increase China’s cultural soft power, and enable culture to guide social trends, educate the people, serve society, and boost development . . . We should deepen our awareness of and confidence in Chinese culture.”

As noted below, this vision of the paramount importance of social harmony is an ancient one in China, having been endorsed by thinkers and rulers for over 2,000 years. It is the vision of the great peace – Tai He or Tai Ping – which comes about when all is in orderly flow. In a more specific application of this value of achieving harmony, former General Secretary Hu called for guidance under the principle of: “long-term co-existence, mutual oversight, treating each other with sincerity and sharing of both good and bad times, strengthening unity and cooperation . . . with public figures without Party affiliation . . . [strengthening] the ranks of non-Party representatives, and selecting and recommending more outstanding individuals with no Party affiliation for taking up leading positions in government bodies at all levels.” This would include, “fully leveraging the positive role of religious figures and believers”. In this grand cultural scheme, there should be a role for everyone to advance the common cause of felicity within an ordered society.

The country’s cultural soft power should be improved – the level of civility of citizens and the moral and ethical standards of the whole society should be significantly raised. Chinese culture should be taken to the global stage. Former General Secretary Hu said: “The strength and international competitiveness of Chinese culture are an important indicator of China’s power and prosperity and the renewal of the Chinese nation” and “We should vigorously foster China’s national character . . . intensify education in patriotism, collectivism and socialism, and enrich the people’s cultural life and enhance their moral strength.”

HARMONY

USE OF MARKET FORCES

Social harmony is an inherent attribute of Socialism with Chinese characteristics said former General Secretary Hu. In his view: “In managing the cultural sector, institutions and

The central task of China going forward, said former General Secretary Hu, will be economic

development. To achieve this, markets will be given increased autonomy and capacity to make decisions. Productive forces driving more and more economic activity will be released by continuing the efforts at reform and opening up begun by Deng Xiaoping.

Renminbi should be more market based and the convertibility of the Renminbi should be promoted. Private financial institutions should accelerate in their development. A coming challenge for China, former General Secretary Hu noted, is “how to strike a balance between the role of the government and that of the market.” He emphasized that deeper reforms of state-owned enterprises are needed

Former General Secretary Hu said definitively: “We should leverage to a greater extent and in a wider scope the basic role of the market

in allocating resources” and “perfect the open economy to ensure more efficient, equitable, and sustainable economic development.”

and that “we should follow more closely the rules of the market.” But, with respect to innovation, former General Secretary Hu proposed a system “of technological innovation in which enterprises play the leading role, the market points the way, and enterprises, universities and research institutes work together.” Intellectual property rights need to be strengthened. Similarly, the rights of farmers to the land which they have contracted to cultivate should also be protected.

For former General Secretary Hu, market forces embody natural trend alignment, which leads to success. But at the same time, former General Secretary Hu proposes a new growth model for China that encourages improved quality and performance, innovation driven development, and growth driven more by domestic consumer demand. The natural power of consumer demand, he said, can be augmented by, “unleashing the potential of individual consumption.”

Chinese exports, the former General Secretary said, should become more competitive in terms of technology, brand, quality, and service. His vision of economic growth embraces global

Interest rates and the exchange rate for the

markets in which Chinese firms must compete on the merits of competitive advantages, being unable to rely on state entitlements to market share.

being aware of reality, a necessity for the Party. He added: “The Party must take a holistic approach and base itself on reality. Truth must be sought from facts, the Party must keep up with the times and be realistic and pragmatic.”

ECOLOGY

RULE BY LAW

Economic development must respect environmental and ecological realities. A moderately prosperous China in all respects must, according to former General Secretary Hu, have a “good ecosystem”. China, he said, must build a resource conserving and environmentally friendly society.” He recognized that, currently, China has “a severe environmental problem and a deteriorating ecosystem.” He added that: “Public awareness must be raised of the need to conserve resources, protect the environment, and promote ecological progress, and foster a social atmosphere of practicing moderate consumption and cherishing the ecological environment.”

One aspect of achieving social harmony lies in the rule of law by which arbitrary and selfserving individualism can be restrained. Even the Party should be under the law. Former General Secretary Hu said: “The rule of law is the basic way for running the country . . . The Party must act within the scope prescribed by the Constitution and laws . . . No organization or individual has the privilege of overstepping the Constitution and laws, and no one in a position of power is allowed in any way to take one’s own words as law.” Parallel to the use of markets will be enhanced use of the rule of law to ensure that markets do not become destabilizing in their effects.

Concern for the environment comes forth from

The Communist Party, said former General Secretary Hu, must bring the right quality of mindfulness to decision-making. Thus it must “open up to new sources of ideas, stay close to the people” whom it serves as a trustee and, as does any faithful trustee, it should consult the beneficiaries of the powers it holds in trust. The Party, he said, must “put people first” which is the core requirement for applying the “Scientific Outlook on Development.” Former General Secretary Hu insisted that: “The fundamental interests of the overwhelming majority of the people – not of any faction or clique within the people – must be the starting point and goal of all the work of the Party and country.”

people’s oversight of national development . . . Consultative processes need to be improved so that a wide range of opinions is solicited, the wisdom of the people is pooled, consensus increases, and synergy arises . . . When we make a decision involving the immediate interests of the people, we must solicit their views on it . . . We should improve the system for Party members and officials to maintain direct contact with the people. We should consult the people on governance, learn about their needs, seek their advice, and draw wisdom and strength from their great practices.”

RESTORATION OF THE IMPERIAL SYSTEM

Accepting the constraints of serving the people theoretically places the Party in a position of subordination to external values and judgments. This demands a system of lawful decision-making as opposed to an arbitrary personalism at all levels of command and control.

In former General Secretary Hu’s report, we find an attempt to re-create the traditional Chinese imperial order, but this time without an imperial family centered on a Son of Heaven, without cults of Heaven and Earth, and without established lineages of gentry families made obedient and docile by the state-enforced habits of filial piety.

Former General Secretary Hu asserted that China “should make good use of legal procedures to turn the Party’s propositions into the will of the state.”

China’s classic imperial system came to full fruition under the Former Han Dynasty (206 BC – 9 AD) It reflected the philosophic recommendations of a number of famous thinkers, but most especially Xunzi (312 BCE – 230). It rested above all else on rule by law where a central administration planned the rules by which all Chinese were to live and worship. The vision of a unified central rule by trained officials had first been advocated by Mozi (470 -391 BCE) and later taken up by a scholarly tradition known as Legalism.

CHECKS AND BALANCES Former General Secretary Hu recognizes that the Rule of Law can’t succeed without oversight and checks on individual authoritarianism. Thus, within a system of social harmony, consultation and deliberative processes are needed to check abuse of power by those in official positions. He therefore recommended that: “The proportion of community-level deputies elected from farmers, workers, and intellectuals on the frontlines of various endeavors should increase with a corresponding reduction in deputies from leading Party and government officials. This will enhance the influence of people’s congresses and contribute to the

Then, under the Former Han Emperors and their ministers, the hard structure of Legalism was contextualized by placing it within a soft structure of Confucian morality. Formalistic elements of Confucian socialization and propriety were incorporated into this Han synthesis of legitimate bureaucratic rule but not

the heart and soul of original Confucianism, which called for freedom under conditions where individuals would develop their private virtue without interference or guidance from the state bureaucracy.

“We should integrate the rule of law with the rule of virtue, intensify education in public morality, professional ethics, family virtues, and individual integrity.” Additionally, former General Secretary Hu’s reliance on realism and keeping up with the times, on finding truth and not inventing it – what he calls the “scientific outlook on development” - reflects very traditional Chinese philosophical approaches within the school of Legalism and its kin, the Five-element, Yin/ Yang cosmology. In those Chinese schools of thought, achieving order placed the human component of creation within a larger dynamic of cosmic evolution and unstable equilibriums. Truth came from reality and reality came from cosmic circumstances. Human leadership was thus to be focused on blending human actions with more fundamental forces at work in the natural world.

This fusion of Confucian moralism with state legalism was accomplished through promotion of filial piety within families on the valid grounds that one who was filial to his or her father would be equally obedient to his or her emperor. The notable Han synthesis was rule by law for the state and conformist family values for individuals. This synthesis became the core of Chineseness for centuries.

In exactly this philosophical approach, former General Secretary Hu said: “There is no end to practice, to seeking truth, or to making theoretical innovations . . . We must respond to the call of the times.” This reflects the perpetual need for human societies and governments to shift, and so better align with the changing modes of cosmic circumstances. The comprehensive social vision articulated by former General Secretary Hu in this November 8 report to the 18th Congress of the Chinese Communist Party is an express return to key Chinese intellectual traditions fostered for centuries by the leaders of China’s Imperial order. Thus, to predict China’s future it would be prudent to understand China’s past.

Mo Zi and his Legalist followers had argued fiercely that only the monitored compliance of individuals could achieve harmony for society. Individuals, Mo Zi felt, were so crude and selfish so as not to be trusted with autonomy for, if left to themselves, they would stubbornly compete with others and bring all to ruin.

The comprehensive social vision articulated by former General Secretary Hu in this November 8 report to the 18th Congress of the Chinese Communist Party is an express return to key Chinese intellectual traditions fostered for centuries by the leaders of China’s Imperial order. Thus, to predict China’s future it would be prudent to understand China’s past.

Han Dynasty social theory was a combination of state law as advocated by Mo Zi and personal virtue as advocated by Confucius, designed to bring about harmony among the people. In just such a manner did former General Secretary Hu say in his November address:

But as Communism in China transforms itself into a force for the promotion of traditional Chinese identity and values, it would be wise for the Party to consider avoidance of ethnic arrogance and hegemonic national pretentions. Pride in self taken too far brings not respect but resentment and opposition. Under the ancient Yin/Yang philosophy, an excess of one virtue was thought to stimulate the rise of countervailing tendencies as an immutable law of nature. Too much Yin must yield to a rise in Yang; and vice-versa. Perhaps this ancient Chinese truth as to the consequences of excess has not lost its relevance with the passage of centuries.

respects in a social environment of personal virtue and cooperation.

APPLICATION OF THE CAUX ROUND TABLE PRINCIPLES

Upon assuming his new position as General Secretary of the Chinese Communist Party, Xi Jinping spoke of responsibility: “Our responsibility is weightier than Mount Tai, and our journey ahead is long and arduous. We must always be of one heart and mind with the people; share weal and woe with the people; make concerted and hard effort with the people; attend to our duties day and night with diligence; and strive to deliver a satisfactory answer sheet to history and the people.”

The CRT Principles of Government, if applied by state organs in China, would contribute to democratic checks and balances and consultations with the people. They would minimize arbitrary abuses of power. Most importantly, perhaps, use of the CRT Principles for Responsible Business and for Government would peacefully and harmoniously align Chinese nationalism with the values and practices of other peoples and nations.

In many ways, today’s China could benefit from the application of the Caux Round Table Principles for Responsible Business, for Government, and for Civil Society Organizations. (see www.cauxroundtable.org) The Caux Round Table Principles for responsible business and for government rest on the outlook on life which former General Secretary Hu described as “scientific “ in that they reflect deep structures of human reality. They arise from the demands of people for justice in the allocation of economic opportunity and political power. They distill into useful common terms the thinking about outcomes that has evolved in many cultures and religions, a fact that augments their claim to being sound and practical. The CRT Principles for Responsible Business, if applied by Chinese enterprises both state and privately owned, would enhance the alignment of such firms with responsible outcomes in market behavior, serving better the needs of consumers, employees, investors, communities and the environment. They would assist Chinese to attain moderate prosperity in all

OUR PRESENT WORLD (EXCERPTED FROM SO FAR FROM HOME BY MARGARET J. WHEATLEY)

It is a world solving its crises by brinkmanship and last minute deals, no matter how important or disastrous the consequences may be.

It is a world of intensifying emotions and positions moving to extremes, where anger has become rage, opponents have become enemies, dislike has become hatred, sorrow has become despair.

It is the Tower of Babel, everybody shouting and nobody listening.

It is a world closing shut, where individuals, groups, ethnicities, and governments fortify their positions behind impermeable boundaries.

It is a world growing more meaningless as lives are taken over by values of consumption, greed, and self-interest.

It is a world where critical thinking scarcely exists, where there is no distinction between facts and opinions.

It is a world of people who had been effective and constructive now feeling powerless and exhausted.

It is a world that discredits science as mere opinion, yet still wants science to give us health, long life, security, and a way out of our problems.

It is a world whose growth, garbage, and disregard will not be tolerated by the planet much longer.

It is a world where information no longer makes a difference, where we hear only what we want to hear, always confirmed never contradicted. It is a world desperate for certainty and safety, choosing coercion and violence as the means to achieve this.

PRECURSORS OF MORAL CAPITALISM

STEPHEN B. YOUNG GLOBAL EXECUTIVE DIRECTOR, THE CAUX ROUND TABLE

An adage is that might oaks from little acorns grow. Another speaks of changes that occur when ideas come into a receptive time. Large ideas for government and society need to gestate; they are not necessarily new when they come to be implemented. Many have antecedents which testify not to their originality, but to the depth of their insights into the human order of things. The power of an idea derives some of its energy from continuity of thought over the generations. In such a fashion does Moral Capitalism have its own roots. Puritan divine John Winthrop in 1630 wrote of his insights into the Calvinism that was beginning to foster modern capitalism in Holland, Scotland, and England. He saw moral concern – ethics if you will – as necessary for a successful society. Later Andrew Carnegie adamantly believed that wealth was encumbered with an ethical obligation of stewardship to be used well for society, not for personal aggrandizement and pleasure. At the same time the intellectual Thorstein Veblen disparaged the “predation” and frivolous consumption that characterized the wealthy during the era of American Robber Baron capitalism. He was nostalgic for the values set down by Winthrop.

My Grandmother, an antiquarian who doted on American Chippendale furniture, would often say that, “There is nothing new under the sun.” By this she meant insights and aspirations more than technologies like electricity and internal combustion engines. One of the continuing points of intellectual resistance to corporate social responsibility is a notion that self-interest in the short run – the efficiency of spot-market pricing – is a timeless, inevitable, and therefore exclusive, driver of human behavior, culture, politics, and civilization. But what if that conceit about the efficiency of self-interest improperly understood is not true? What if ideas of a moral capitalism have been around for a while? Would not precursors to a moral capitalism lend credibility now to the realistic possibility of arranging market actions and business calculations more in line with ethical requirements? Recently, I read three well-known essays that could be taken as precursors of a moral capitalism. First was John Winthrop’s essay written in 1630 on board the ship Arbella as

the first Puritans sailed into what is now Boston Harbor. The second was Andrew Carnegie’s The Gospel of Wealth, and the third was Thorstein Veblen’s The Theory of the Leisure Class.

to govern the conduct of colonists upon their arrival in their new homeland. He titled his guidance “A Model of Christian Charity”, taking the vital principle of love as the core of Christian living. In this presentation of the importance of love, Winthrop took the same approach more recently advocated by Pope Benedict 16 in his recent encyclicals Deus Caritas Est and Caritas in Veritate. Winthrop lived during the dawn of what we call the capitalist era of self-sustaining market growth built upon the technologies of the industrial revolution. Calvinist families in The Netherlands and English families like Winthrop’s took the lead in inventing modern Capitalism. He himself was a lawyer but he came from a family that made its wealth in enterprise. He was well-educated in the Calvinist world-view. Winthrop wrote his essay on the need for love as a response to perplexity over God’s toleration of inequality among people – some rich, some poor, ”some high and eminent in power and dignity; others mean and in submission”. Winthrop asserted that development of the moral sense in community would soften the harsher sides of human living. For Winthrop, the moral sense was not to be left out in the cold before the doors of work and enterprise. Though he lived before the robust flowering of capitalism, Winthrop’s essay addressed a fundamental moral issue associated with private property and free markets – inequality among people. Winthrop provided a theological basis for moral acceptance of individualism in economic activity, where values were to be set at random by market participants and not imposed upon them by the state or other normative institutions. Without some justification of outcome inequality, the ethics of modern capitalism remain open to meaningful objection and any private property regime subject to resentment and demands for re-distribution of accumulated wealth and earnings.

John Winthrop by Charles Osgood, 1834. Source: MHS

JOHN WINTHROP John Winthrop (1578 -1649) was a leader of the first Puritans to settle in Massachusetts. With several others he made the Cambridge Agreement in 1629 to sail to Massachusetts in North America to found a colony or plantation there. On board the ship Arbella he wrote an essay setting forth the moral vision which was

Winthrop begins his argument by making three points about God’s supposed intentions. First, he says that God considers himself more honored if his “servants” seek each on his and her own to please him, saying “the end is to improve our lives to do more service to the Lord”. Thus, God dispenses his gifts one by one, person to person and not collectively. Among these disparate individuals, God sends forth his spirit to work his good intentions: “first upon the wicked in moderating and restraining them, so that the rich and mighty should not eat up the poor, nor the poor and despised rise up against and shake off their yoke.”

Having made these preliminary points, Winthrop moves to his principal admonition that we here on earth are to walk with one another and not otherwise. “There are two rules whereby we are to walk one towards another: Justice and Mercy.” This is not a doctrine of rugged individualism but one of moral concern for others.

Second, Winthrop points out that God exercises his grace among selfish, short-sighted individuals, as in the great ones, to promote “their love, mercy, gentleness, temperance etc., and in the poor and inferior sort, their faith, patience, obedience.” But, Winthrop relies upon the working of a moral force to counter the invidious inequality that would prevail if we lived with each other as if engaged in a war of all against all.

More demanding yet comes Winthrop’s emphasis on love of neighbor:

Third, Winthrop suggested that inequality turns people towards one another that they might benefit from divisions of talents and labor – “that every man might have need of others, and from hence they might be all knit more nearly together in the bonds of brotherly affection.”

Upon this ground stand all the precepts of the moral law, which concerns our dealings with men. ... First, that every man affords his help to another in every want or distress. Secondly, that he perform this out of the same affection which makes him careful of his own goods,

But to this point, Winthrop adds a powerful qualification - wealth is not fully private. It is burdened in our hands with a claim from God as to its proper use. It is as if we are only renting or borrowing it from God. Earthly wealth is to be used by man “but for the glory of his Creator and the common good of the creature, man.” Therefore God still reserves the property of these gifts to Himself as Ezek. 16:17, He there calls wealth, His gold and His silver, and Prov. 3:9, He claims their service as His due, “Honor the Lord with thy riches,” etc. (In this Winthrop unknowingly prefigured the contemporary Catholic Social Teaching of the “universal destination of goods.”)

Winthrop then uses the example of debt repayment to illustrate his understanding of how to align one’s actions with love of neighbor: “If he hath present means of repaying thee, thou art to look at him not as an act of mercy, but by way of commerce, wherein thou art to walk by the rule of justice; but if his means of repaying thee be only probable or possible, then he is an object of thy mercy, thou must lend him, though there be danger of losing it.” Thus, for Winthrop, even in business there is

a role for love of others, for compassion and generosity. What he calls “commerce” is not crude exploitation, maximizing one’s selfish benefit. This comes near the sensibility behind a moral capitalism.

predominate in the soul and little by little expels the former self-righteousness. We can assist the inflowing of this moral sociability by working on our hearts with ”prayer, meditation continual exercise at least of the special influence of this grace, till Christ be formed in them.”

Winthrop then generalizes how love of neighbor pervades all social intercourse:

When we so open ourselves to this transformation, we earn God’s love for: “He loves his elect because they are like Himself . . . The proper proportion of love in our souls is a divine, spiritual, nature; free, active, strong, courageous, permanent; undervaluing all things beneath its proper object and of all the graces, this makes us nearer to resemble the virtues of our heavenly father.”

[T]rue Christians are of one body in Christ (1 Cor. 12) . . . All the parts of this body being thus united are made so contiguous in a special relation as they must needs partake of each other’s strength and infirmity; joy and sorrow, weal and woe. If one member suffers, all suffer with it, if one be in honor, all rejoice with it. (1 Cor. 12:26) If one member suffers, all suffer with it; if one be in honor, all rejoice with it . . . this sensitivity and sympathy of each other’s conditions will necessarily infuse into each part a native desire and endeavor, to strengthen, defend, preserve and comfort the other . . . We must love brotherly without dissimulation, we must love one another with a pure heart fervently. We must bear one another’s burdens. We must not look only on our own things, but also on the things of our brethren.

Winthrop wrote: Now the only way to avoid [God’s anger and punishment], and to provide for our posterity, is to follow the counsel of Micah, to do justly, to love mercy, to walk humbly with our God. For this end, we must be knit together, in this work, as one man. We must entertain each other in brotherly affection. We must be willing to abridge ourselves of our superfluities, for the supply of others’ necessities. We must uphold a familiar commerce together in all meekness, gentleness, patience and liberality. We must delight in each other; make others’ conditions our own; rejoice together, mourn together, labor and suffer together, always having before our eyes our commission and community in the work, as members of the same body. So shall we keep the unity of the spirit in the bond of peace.

Though Winthrop believed that our souls have a “sociable nature”, he was a strict Calvinist in his insistence on the sinful selfish nature of us all as a result of Adam and Eve’s violation of God’s instructions. He wrote: “But Adam, himself rent from his Creator, rent all his posterity also one from another; whence it comes that every man is born with this principle in him to love and seek himself only.”

In a demand for subjugation of profit to responsibility, Winthrop concluded his exhortation with this injunction:

Only the welcoming of Christ Jesus into the soul can transform the self-seeking person into one who can live out the requirement of love. It is Christ, said Winthrop, not ourselves independently and autonomously who can infuse in our natures the principle of love, providing a continual supply of this constructive motivation, that becomes little by little

But if our hearts shall turn away, so that we will not obey, but shall be seduced, and worship . . . our pleasure and profits, and serve them; it is propounded unto us this day, we shall surely perish out of the good

Andrew Carnegie, by Theodore C. Marceau, 1913. Source: Library of Congress.

land whither we pass over this vast sea to possess it.

after its Civil War over slavery. Carnegie was born to poverty in Scotland and came to the United States with his parents in 1848. His first employment was as a factory hand in a bobbin factory. He died in 1919 as the second richest man in the United States. He accumulated his wealth being true to Scotch Calvinist behaviors of thrift, discipline, uncompromising persistence and tough minded attention to the needs of his business. Nevertheless, something of John Winthrop’s notion of charity remained within Carnegie. He became famous for philanthropy – giving away much of his

Here from 1630 in the thoughts of a Puritan divine do we have a well-argued Christian recommendation for a moral capitalism.

ANDREW CARNEGIE Andrew Carnegie (1835 – 1919) was perhaps the paragon of capitalist success when the United States rose to great industrial might

wealth for the benefit of others and to finance public goods such as free libraries and research. Philanthropy – the “love of human kind”, of course, is just Greek for Winthrop’s concept of Christian charity with deep concern for others. But Carnegie was also famously known as an exponent of Social Darwinism – the dominant secular ideology of the Gilded Age of Robber Barons and union busting in the United States. Social Darwinism is the anti-thesis of Moral Capitalism as it denies the presence of the moral sense in our lives and especially in our struggle for material existence. Social Darwinism, the intellectual creation of Herbert Spencer, is the law of the jungle imposed upon human engagements – kill or be killed; eat or be eaten.

time to criticize the inevitable.” He continued, writing that the law of competition: “is here; we cannot evade it; no substitutes for it have been found; and while the law may be sometimes hard for the individual, it is best for the race, because it insures the survival of the fittest in every department.” Within the constraints of the inevitable, however, Carnegie asserted that people had control over what to do with the wealth that came their way as a result of their superior achievements under the law of competition. He advised: This then is held to be the duty of the man of wealth: To set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and, after doing so, to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer . . . to produce the most beneficial results for the community – the man of wealth thus becoming the mere trustee and agent for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could do for themselves.

Carnegie accepted Social Darwinism as a natural law but was uncomfortable with all of its implications. His discomfort pointed him somewhat in the direction of a more moral capitalism. Most notably was his insistence that wealth was really assets held in trust to be used for social ends. His insistence on philanthropy was an attempt to counter-balance the harshness and injustices inherent in the cut-throat individualism promoted by Social Darwinism. In this he stood on Winthrop’s ground that a higher calling of moral use has a claim on our wealth. Carnegie wrote in his essay The Gospel of Wealth: “The problem of our age is the proper administration of wealth, that the ties of brotherhood may still bind together the rich and poor in harmonious relationship.” He wrote in the context of a new industrial system – capitalism still quite raw and red in tooth and claw – which he saw no way to fundamentally reform, saying: “But whether the change be for good or ill, it is upon us, beyond our power to alter, and, therefore, to be accepted and made the best of. It is a waste of

Patronizing indeed, but accepting of social responsibility on the part of those with means. This is a counsel towards concern, not a selfish fixation on accumulation as the just and fitting end of a moral life: Acting in accordance with this advice, it becomes the duty of the millionaire to increase his revenues. The struggle for more is completely freed from selfish or ambitious taint and becomes a noble pursuit. Then he labors not for self, but for others; not to hoard, but to spend. Carnegie offered the normative proposition

in rural Minnesota of immigrant Norwegian parents, Veblen took his PhD at Yale under the influence of prominent Social Darwinist William Graham Sumner. Like Carnegie, Veblen accepted the realities of the brute capitalism of his time, but did not like them. In his noted 1899 analysis of Gilded Age capitalism, The Theory of the Leisure Class, Veblen was open to a different set of values under which business could be conducted. Veblen believed that the new industrialization that Carnegie, too, had observed had bifurcated economic activity. On the one hand was productive and useful labor and on the other a predatory exploitation: materialistic, ostentatious, and indulgent. Veblen observed that pecuniary struggle (Social Darwinism in practice) led to conspicuous consumption and leisure, putting one’s wealth and power on social display. A pecuniary society exalted leisure over real workmanship. Veblen drew upon the evolution of human society for his principal distinctions. When people had evolved from early primitive communities to a more predatory phase, they turned workmanship into exploitation, seeking trophies through force and aggression. Such cultures had schemes of life and canons of conduct controlled to a greater or a lesser extent by a “predatory animus”.

Thorstein Veblen, by Edwin B. Child, 1934. Source: Yale University.

that the man who dies possessed of available wealth that he was free to administer for the community dies “disgraced”.

In the post-primitive phase of human evolution, Veblen surmised, ownership emerged conjoined to a leisure class. In short, the leisure class did not work. But the economic process became a struggle among people for possession of goods. Veblen noted that the end of such accumulation was not consumption or use but display. The possession of wealth conferred honor, an “invidious distinction” wrote Veblen. Possession of property became the basis for self-esteem and self-respect. The strongest motive for economic activity, Veblen believed, was the “propensity for emulation” of others. But, Veblen noted, under this new social dynamic the need to accumulate never came

Carnegie’s intuition that the wealth made possible by capitalism through industrial production and the concentration of ownership had a mixed character being both private and something more was a step towards a practice of social responsibility within the dynamics of private property and free markets.

THORSTEIN VEBLEN Veblen (1857 – 1929), an academic, was a contemporary of Andrew Carnegie. Raised

At the Moulin Rouge: The Dance Henri de Toulouse-Lautrec, French, 1890. Source: Philadelphia Museum of Art

to an end. Each level of accumulation, each success in expanding personal ownership, became the starting point for a new effort seeking a fresh increase in wealth. Since the motive of consumption for the leisure class is emulation, the ideal of consumption is whatever lies just beyond our reach. No standard of sufficiency, of satiation, ever arrived; the amount of wealth one needed to display was always a moving target. And the power conferred by existing wealth made possible more accumulation. Thus, analyzed Veblen, the wealth of capitalism was always moving towards the 1% away from the 99%.

the 1990’s in the stakeholder theory of business ethics. In an effort to envision an alternative to a society of emulation, pecuniary exploitation, and conspicuous waste, Veblen imagined the possibility of the conservation of archaic traits. Could the economic and social behaviors of the pre-predatory age be brought back to the fore he asked? Veblen observed that not everyone was fully socialized to the norms and practices of the predatory/pecuniary society. Some individuals were different from the advertised norm. They show a reversion to ancient patterns: “it is to these ancient, generic features that modern men are prone to take in cases of variation from the human nature of the hereditary present.” That ancient cultural stage, said Veblen, had been more peaceful and unaggressive than his present age. The dominant spiritual feature, he assumed, of that ancient order was a “sense of group solidarity” embracing a sympathy with all facility of human life, and a sense of the generically useful.” Part

Veblen felt that the consumption befitting the values of a leisure class was “waste” to society because it did not serve “human life or human well-being on the whole”. Here Veblen suggested a standard of judgment as to products and enterprise that looks to certain stakeholders – society, community, the environment – as interested parties in market decision-making. This thought would surface in the 1980’s and

of this ancient spiritual feature was “conscience, including the sense of truthfulness and equity, and the instinct of workmanship.” To strengthen his case for retaining these archaic traits, Veblen used evolution, noting that modern industrial production need efficiency in operations. This public good – or a collective interest – he said was best furthered by ‘honesty, diligence, peacefulness, good-will, an absence of self-seeking”. He concluded: “These traits are present in a markedly less degree in the man of the predatory type than is useful for the purposes of the modern collective life.” Here Veblen was calling to our attention not only the possibility of a moral capitalism, but the necessity of one. Veblen took time to write a chapter suggesting that within the fierceness of modern industrial capitalism safe-havens might be found or cultivated to promote the traits conducive to a more moral capitalism. First was religion, which provided a sense of communion with the environment and with generic life processes, and promoted the “impulse of charity or of sociability”. Second, the wealth enjoyed by the pecuniary class permitted younger members of the class who did not have the toughminded aptitudes for success in predation to find engagements in less fierce parts of the society. Third, were non-profit organizations that provided charity or worked on social amelioration. Fourth was the activity of women from leisure class families. Like Carnegie, Veblen seemed to have been resigned to the imbalances and inequities of the capitalism of his age. But, like Carnegie, Veblen was unwilling to accept everything promoted by Social Darwinism as correct or advantageous. He sought the practical reality of a more moral capitalism. In his description of “archaic” traits he echoed so much of what John Winthrop had preached to this fellow Puritans at the dawn of capitalism.