About work, economics, power and economic ethics

A contribution to the discussion on the basis of Arthur Rich’s* business ethics

by Dieter Sprock

It cannot be denied: Life on our planet is shaped by work. Most of the creatures spend the time of their life searching for food, the protection of their own life and the rearing of their young. Also the humans cannot escape from these demands of life. But they did not put up with collecting berries and to hunt and raise their children in caves, instead they started to cultivate the ground upon which they settled down and to make the treasures of the earth serviceable to them.
Since that early time, humanity has come a long way: man has “climbed the mountains” after having overcome the fear of evil spirits that might have been behind the forces of nature; he has cleared the ground and forests, he has constructed roads, crossed the seas, traded, built, invented and thought; he has wrested the secrets from nature, has tamed the steam and created a rich culture. With the help of science and his outstanding technology, he even entered the space, and now he is preparing himself, by means of the digital revolution, to once more reinvent the working world.

From agricultural to industrial society

“The process of getting power over nature or the world”, writes the theologian and expert in business ethics Arthur Rich, “began at the time when earliest ancestors, in the Neolithic period [about 12,000 years ago] passed over from the appropriating lifestyle to the producing one, i.e. instead of gatherers, hunters and nomad shepherds they became sedentary farmers. This led to the the actual cultural development of humanity. [...] With the advent of agriculture, man has, in fact, started “cultivating” the natural world, that means actively use it and remodeling it to his own purposes. One of his legitimate children is the modern technique, which, in the course of a long history, has risen only very recently, via various intermediates, to a breathtaking, but also menacing altitude. Today, by doing so, almost all sectors of life, from the raw material economy to human medicine, have been profoundly reshaped, and not only the face of the earth, but also the conventional living conditions have been changed in a way that this process deserves the concise labeling by the term ‘Revolution’.”¹ (Volume I, p. 47)
The Industrial Revolution emanating from England only in the second half of the 18th century has actually changed the economic, labour and living conditions in the industrialised countries in the last three hundred years more than anything else in the millennial history before. Their ingenious inventions have increased the productivity of work to such an extent that for the first time in history humanity would be able to create prosperity for all. But if you do not close your eyes to the facts, you cannot ignore in reality that the technical achievements have only given a high level of consumer welfare to some of the people, while others do not even have the bare necessities for a decent life. According to the World Hunger Index 2017, more than 800 million people worldwide are starving, despite increasing food production. “Even in Western, affluent societies there is still, and recently again, often alarming poverty, that cannot be attributed back to the fault of the poor themselves”.²

Economy and the question of power

That business and trade are also linked to power and politics is not new. What is new, however, is the degree of power that certain industrial giants have been able to achieve, for example, in the areas of the raw materials, chemical, weapons, electronics, and last but not least the financial industries in the wake of industrialisation.
With the increasing automation of production, capital played an increasingly important role in the economy. Increasingly, only financially strong individuals or corporations could afford the necessary investments for the highly developed rationalised production facilities, and this led to a shift in emphasis from the “production factor labour to the production factor capital”. The “manager entrepreneur”, who has the corporate capital but is often involved in the company not more than symbolically, began to dominate. And so, in addition to the relatively stationary local and national economy, where crafts and industry are still flourishing in many places, a global economy has developed that has completely changed the competitive structure of the market economy.
Multinational corporations, since the Second World War shaping the image of the global economy, strive for market dominance and are interested in expanding their market and in restricting competition. “Within the market system,” writes Arthur Rich, “we must pay attention to the universal tendency to establish positions of power and in doing so reduce the processes of competition. [...] Ultimately, this reaches a point where production begins to turn into a side effect of the striving after profits when the capital achieves profits without the use of labour and the employment of the means of production, that is to achieve profits through speculative business activities. Large businesses maintain financial institutions of their own that earn massive profits in this fashion, but not through the production and the sale of investment goods, consumer goods or services.”2 (Volume II page 262)
Under such conditions, the legitimate pursuit of profit degenerates into an aggressive predatory competition struggle, in which it is often no longer “the competitiveness of a company that determines its market share,” but the economic power position. The market economy thus degenerates into a kind of “economic Darwinist playground” where the stronger displaces the weaker. One creates “economic constraints” to more and more growth, which the individual entrepreneur may not be able to escape if he wants to survive. Thus, some go bankrupt and others,  still in the market, come under ever-increasing pressure to perform. Companies are bought and closed to eliminate competition. There is a kind of economic war, a war, as history shows, not always confined to the economy.
Globally-oriented industrial giants seek to break national boundaries and converse their economic power into political power, giving their multi-nationality an exceptional position. It allows them to circumvent the legal framework of their countries of origin by allowing to choose the sites for their investment freely. “In addition, their economic power gives them the ability to change the existing conditions of locations to their favour (by tax reductions, safety precautions for the sales of their own products in the foreign country, concessions concerning the repatriation of profits, etc.

Judging economy by its service to life

The economic ethicist judges economy by its “service to life”; for its purpose is to serve human beings, not to make humans serve economy. It is not sufficient for the economy to merely produce goods and services necessary for a humane existence – although this is of course a priority in the event of shortage – but it should be achieved in a way that enables “every willing person” to be a “fully participating, influencing and thus – by definition – jointly responsible member“ of the working world.
Work is not only a “means of earning a living”, but also a source of meaning and community. It provides structure and meaning to life. Being active is a defining and vital human trait. Even small children want to work as they imitate their parent’s profession during play. And for people who lose their jobs, the loss of importance and social contact is often more serious than the financial burden attached.
“Service to life” or “orientation toward human necessities”, as Rich also calls it, by design includes “environmental justice” and “distributive justice”. An economy that destroys the natural basis of life is as equally unconducive to life as an economy that creates social inequality with “needless abundance” on one side and “lack of what is most necessary” on the other.
Crucial to Rich’s argument is the fact that he perceives economy as it presents itself today not as a “natural product”, but rather as an “institution” created by man, i.e. a “historical cultural product” and therefore sees it as modifiable. In doing so, he does not follow the notion that a structural transformation of social conditions would automatically change people as individuals, nor the expectation that an internal transformation of human person would lead to the elimination of structural injustice in society. Changes have to be effected on both levels. For him, the structures of economic order should not be based on theories such as liberalism or socialism, but should be centred around what is most appropriate for the people affected by it.
A human order requires basic trust. Even the everyday steps, actions and decisions require trust. According to Rich, without “good faith” even the best laws and the most helpful structures would be deprived of their effectiveness. If fidelity and faith no longer provide reliable categories for orientation, the human aspect of life falls into disrepair.

The question of distribution

The global economy and its unbounded markets form a complex global network that renders international cooperation between individual economies indispensable. Previous experience has demonstrated that economic inequalities do not automatically level out; on the contrary, they are exacerbated.
According to Rich, one of the most explosive “distribution problems” is the immense disparity in income distribution between developed and developing countries. While not ignoring the complicity of the developing countries, he blames “confrontational structures of economic exchange relations” between industrialised and developing countries. In order to counteract the “intolerable disadvantages of developing countries in market-based exchange relations”, it is necessary to “reorganise economic cooperation” between “North and South” in the spirit of “a participatory structure”. In other words, the creation of conditions that enable developing countries to achieve at least a certain degree of equilibrium with the industrialised countries in the long term.5 (Volume II, p. 366)
A crucial prerequisite would be the limitation of economic power with the aim of controlling and managing it. In the event of failure and if the imbalances in the global economy continue to worsen, Rich fears “disastrous conflicts” between “North and South” in the future.