Johannes Van de 20080323-Scg-Paper

A MoralTheological Critique of Business Ethics
Between Pharisaic Moralism and Prophetic Morality
Johannes van de Ven, Ph.D.

Advisor, Swiss Consulting Group
SCG Occasional Paper # 15 1
Rome, March 23, 2008
One man pretends to be rich, yet has nothing;

another pretends to be poor, yet has great wealth
(Proverbs 13:7)
1
Swiss Consulting Group Occasional Papers are preliminary materials circulated to stimulate public
debate and critical comment. The analysis and conclusions set forth are those of the author and do not
necessarily reflect the views of the Swiss Consulting Group or its staff.
A MORALTHEOLOGICAL CRITIQUE OF BUSINESS ETHICS
BETWEEN PHARISAIC MORALISM AND PROPHETIC MORALITY
SCG Occasional Paper # 15 Johannes van de Ven Rome April 2008
Table of Contents
Introduction....................................................................................................................4
Objectives ......................................................................................................................5
Terminology...................................................................................................................8
PART I
PHILOSOPHICAL FOUNDATIONS OF BUSINESS ETHICS................................12
1. The Modern Debate in Historical Perspective .........................................................12

1.1. Adam Smith ..............................................................................................12
1.2. Friedrich Hayek ........................................................................................15
1.3. Milton Friedman .......................................................................................18
2. Contemporary Ethics Models at Business Schools..................................................23

2.1. Beyond the Dominant Academic View ....................................................23
2.2. Thomas Donaldsons Integrative Social Contract ....................................27
2.3. Michael Porters Strategic Corporate Social Responsibility ....................33
2.4. Roger Martins Virtue Matrix...................................................................37
3. Preliminary Conclusion: Towards a Paradigmatic Shift..........................................40
PART II
CORPORATE MORALITY IN THEOLOGICAL PERSPECTIVE ..........................43
1. At the Crossroads of Economics and Theology.......................................................43
2. Business Ethics and Moral Theology in Historical Perspective ..............................46
3. The Social Magisterium of the Roman Catholic Church.........................................51

3.1. The Foundations of Catholic Social Teaching..........................................54
3.1.1. Rerum Novarum (1891).............................................................54
3.1.2. Quadragesimo Anno (1931).......................................................56
3.1.3. Mater et Magistra (1961) ...........................................................58
3.1.4. Pacem in Terris (1963)...............................................................60
3.1.5. Gaudium et Spes (1965).............................................................61
3.1.6. Populorum Progressio (1967) ....................................................62
3.1.7. Octogesima Adveniens (1971)...................................................64
3.2. The Social Magisterium under Pope John Paul II ....................................67
3.2.1. Redemptor Hominis (1979) .......................................................67
3.2.2. Laborem Exercens (1981)..........................................................68
3.2.3. Sollicitudo Rei Socialis (1987) ..................................................69
3.2.4. Redemptoris Missio (1990)........................................................72
3.2.5. Centesimus Annus (1991)..........................................................74
3.2.6. Veritatis Splendor (1993)...........................................................78
3.2.7. Evangelium Vitae (1995)...........................................................80
3.2.8. Compendium of the Social Doctrine (2004)..............................81
3.3. The Social Magisterium under Pope Benedict XVI .................................88
3.3.1. Cardinal Ratzinger on Church and Economy ............................88
2
3.3.1. Deus Caritas Est (2005) .............................................................90
4. Business Ethics in Contemporary Contextual Theologies.......................................93

4.1. Latin American Liberation Theology .......................................................93
4.1.1. The Coming of Age of Liberation Theology .............................94
4.1.2. The Role of the CELAM............................................................95
4.1.2.1. Medelln (1968) ..........................................................95
4.1.2.2. Puebla (1979) ..............................................................97
4.1.2.3. Santo Domingo (1992)................................................99
4.1.2.4. Aparecida (2007) ......................................................100
4.1.3. Theology as a Language of Liberation ....................................106
4.1.3.1. Gustavo Gutirrez .....................................................107
4.1.3.2. Cldovis Boff............................................................110
4.1.3.3. Franz Hinkelammert .................................................113
4.1.4. The Role of the Congregation for the Doctrine of the Faith....119
4.1.4.1. Libertatis Nuntius (1984)..........................................120
4.1.4.2. Libertatis Conscientia (1986)....................................123
4.1.5. The Future of Liberation Theology..........................................126
4.2. North American Neocon Theology.........................................................131
4.2.1. The Rising Influence of Neocons ............................................131
4.2.2. Theology as Language of Legitimation ...................................132
4.2.2.1. Michael Novak..........................................................133
4.2.2.2. Richard John Neuhaus ..............................................141
4.2.2.3. George Weigel ..........................................................144
4.2.3. The Future of Neocon Theology..............................................148
5. Preliminary Conclusion: Evaluating MoralTheological Contributions ...............152

5.1. Advantages and Limitations of Official Catholic Social Teaching ........152
5.2. Strengths and Weaknesses of Liberation Theology................................153
5.3. Pros and Cons of Neocon Theology .......................................................161
CONCLUSIONS........................................................................................................165
1. The Limited Usefulness of Mainstream Business Ethics Models .........................165
2. Assessing the MoralTheological Contributions to the Debate ............................170
3. Catholic Social Teaching in the Corporate Boardroom.........................................177
4. Challenges for Moral Theologians and Business Ethicists....................................182
References..................................................................................................................186
3
Introduction
Proposing a moraltheological critique of business ethics seems a rather pretentious

if not moralizing claim. At first sight, a lack of understanding and communication
characterizes the relationship between theology and economics, between church
officials and business people. Most theologians are educated in an environment,
which is either inimical or ignorant about business. Theological reflection is a rare
commodity within economics, and most of what goes on is outside the professional
mainstream. Religious leaders and theologians in most parts of the world downplay
the relative importance of economics at best, or have an antibusiness attitude at
worst. Capitalism smells bad in most sacristies, seminaries and religious charities.
The widely held viewpoints of library cubicles and ghetto parishes is that commerce
and multinational corporations are inherently characterized by an abundance of evils,
including deceit, envy, lust, vanity, and avarice. In theological circles, money has too
often been regarded as the radix malorum cupiditas or the root of all evils. These
assumptions of theologians are based on a false or distorted perception of the
economic reality. Personal experience has taught me that there is a great deal of
ignorance on the part of clergy and theologians with regard to discipline of
economics. Economics might be characterized as the dismal science, but that does not
justify ignorance.
By the same token, business people too often feel awkward or are unwilling to discuss
ethical dilemmas. In the business community, it is mostly not done to discuss
questions regarding morality. The popular axiom church on Sunday and work on
Monday is widely applicable on modern society. Most economists seem happy to
ignore or neglect organized religion. In the world of finance, religion is often regarded
as a vestige of an earlier stage of human development, which would wither away as
humankind becomes more sophisticated and rational. At the personal level, it has been
demoralizing and disheartening to see people in Rio de Janeiros Baixada Fluminense
released from material poverty by free markets, only to embrace the consumerist
lifestyle.
Contemporary students of economics and finance will rarely encounter any discussion
of relationships between economics and religion. At best a discussion is ignored, at
worst it is considered illegitimate or irrelevant. From the business viewpoint, the pope
is a Chief Executive Officer of a huge multinational corporation, specializing in moral
and theological products. For economists, church attendance is based on a rational
choice, pleasure and a desire for social networking, but not necessarily driven by
faith. Whereas theologians articulate religious beliefs, economists are interested in
studying the causal relationship between religion and economic performance. It seems
that sharply diverging assumptions and worldviews drive economists and theologians.
4
Objectives
This occasional paper is primarily an effort to understand how the large issues of
business and ethics and business ethics and moral theology are, or ought to be,
interconnected. What has been missing so far in the business ethics debate is a serious
engagement or dialogue between the depth of Christian social teachings and the
contemporary challenges posed by corporations. In order to make the contemporary
business ethics debate more relevant, moral theologians should get more involved.
The ageold standoff between theologians and economists challenges us to reframe

the debate. At this moment, business ethics can be regarded as an area of pioneering
moraltheological inquiry at best. The main objective of this study is therefore an
attempt to make a moraltheological contribution to the business ethics debate.
Neither is the church only about collecting money, nor is business only about making
money. In other words, passing the collection basket on Sundays is not necessarily
different from paying the bills during the week. The fashionable executive leadership
coaching programs and the Spiritual Exercises of Saint Ignatius are not separated by
four centuries because ultimately they have the same ultimate objectives.2 An appeal
will goes both ways. Whereas church officials and theologians ought to take a closer
look at economics, business people and economists are encouraged to pay more
attention to matters related to faith and morals. This is not borne out of sudden
conversion, but out of necessity. Although the strictly economic arguments are valid
and plausible, the quest for business ethics can also be driven by personal morality
and/or religious convictions. Such approach will make corporate responsibility
stronger, more deeply rooted and more convincing.
At the outset, the philosophical foundations of what is regarded as the dominant

academic view in the contemporary business ethics debate are examined. The
assumptions of Adam Smith, Friedrich Hayek and Milton Friedman will be examined
on their wideranging social, economic and political ramifications. The premises of
the case for and against business ethics are highlighted as they are crucial to advance
the debate. Advocates of business ethics argue that corporations cannot only look at
shareholder desires, as if they were operating in a sociopolitical, environmental or
legal vacuum. Supporters furthermore claim that corporations cannot turn a blind eye
to stakeholders. In return, opponents argue that only selfinterest and self
preservation warrant that a corporate manager does not get engaged in dubious tricks
that erode shareholder value. Critics also argue that mere profit maximization is in the
biggest stakeholders interest. This argument is based on the premise that the
management of a corporation is under strict fiduciary duty to advance the interests of
its shareholders, who are its owners. Throughout this study, it will become clear that
2
For additional indepth information, see two excellent books on the contemporary value of Saint
Ignatius Spiritual Exercises: Bingemer, Maria Clara Lucchetti (1989), Deus e o divino servio
Mstica trinitria e prxis crist em Santo Incio de Loyola, Rome: Pontifcia Universidade
Gregoriana; and: Lowney, Chris (2003), Heroic Leadership: Best Practices from a 450yearold
Company that Changed the World, Chicago: Loyola Press. See also the following outstanding
conference paper: Denk, Kurt & Timothy Brown (2003), Incarnating Solidarity and Justice:
Perspectives from ServiceLearning in Philosophy and Ignatian Spirituality, St. Paul, MN: University
of St. Thomas (Catholic Social Thought across the Curriculum Congress).
5
in a world where corporate managers are encouraged to think big, show no mercy, cut
losses, advance only the most profitable deals, and where toughness is a virtue, it is
hard to make the case for ethics in business. In corporate boardrooms, where time is
money, there seems to be no place for ethics. At first sight, it seems that a winner
takesitall and supersizeme mentality necessarily has to reign in the business
world.
After highlighting the dominant academic view, this study will examine how business
ethics can or should be a contemporary challenge to moral theology. The underlying
or implicit hypothesis is that business ethics should not solely be driven by a
corporations public relations or marketing departments. Branding agents are aware
that religion can be a powerful marketing tool. Corporate branding campaigns often
look like ritual liturgies. Corporations are more and more portrayed as identities with
a soul. Marketers are modern capitalist missionaries looking to convert customers and
increase shareholder value. It is increasingly becoming clear that religious identities
and convictions have a direct impact on economic behavior. Religious values, norms
and beliefs stimulate and affect political and economic developments and vice versa.
It is important to stress that there is no intention to supplant mainstream economics

with Christian economics. A moraltheological inquiry of business ethics is not
necessarily the same as promoting Christian economics. In the era of globalization, a
push for a specific Christian agenda within economics is often regarded as
problematic.3 Arguing strictly from Christian premises pollute mainstream economics.
Economics is not an exact science, in which objective, cumulative, definitive
knowledge is possible. Despite opposition from neoclassical economists, economic
analysis is driven by tentative hypotheses that can never be fully proven. Economists
differ greatly in their worldviews and policy descriptions, which often involve
different beneficiaries and victims. Although the ultimate concern of economics is not
to make value judgments, it mostly operates on the borderline of value and scientific
judgments. In return, the task of a moral theologian is not to merely moralize or
strictly push for moral teachings.
The ultimate objective of this study is therefore to examine how business ethics can or
should be a contemporary challenge to moral theology, which can seriously overcome
the shortcomings of a narrowminded economistic or merely financial worldview.
Economics and theology will be regarded as distinct and separate disciplines, which
can be enriched by an interdisciplinary exchange.
At the heart of this paper, I will systematically examine the social magisterium of the
Roman Catholic Church. A special emphasis will be placed on the pertinent social
3
Several economists, who are inspired by the Christian message, are critical of attempts to integrate
Christianity and economics. See for example: Waterman, Anthony (1987), Economists on the Relation
between Political Economy and Christian Theology: a Preliminary Survey, International Journal of
Social Economics, 6, pp. 4668; Brennan H. & Anthony Waterman (1994), Economics and Religion:
Are They Distinct? Boston: Kluwer; Heyne, Paul (1994), Passing Judgments, Bulletin of the
Association of Christian Economists USA, 23, pp. 915; Heyne, Paul (1996), Theological Visions in
Economics and Religion, Forum for Social Economics, 2, 7 pp.; Richardson, David (1988), Frontiers
in Economics and Christian Scholarship, Christian Scholars Review, 4, pp. 381400; Richardson,
David (1994), What Should Christian Economists Do? . . . Economics, Bulletin of the Association of
Christian Economists USA, 23, pp. 1633.
6
encyclicals and Compendium of the Social Doctrine for being chief custodians of
Christian ethics. As emphasized by Pope John XXIII in his encyclical Mater et
Magistra, it is essential that this doctrine be known, assimilated, and put into effect
in the form and manner that the different situations allow and demand.4 Examining
official Catholic social teaching (CST) is equally pertinent beyond a strict theological
or intraecclesial perspective, as the Vatican is increasingly wielding influence at the
global stage by means of political diplomacy. It is generally acknowledged that the
Vaticans faithbased diplomacy delivered the decisive knockout blow to the Soviet
empire. Nowadays, the Vaticans theological grammar and vocabulary on the Iraq
War is going far beyond the institutional boundaries of Catholicism and powerfully
resounds in Islamic circles. The current dialogues between the Vatican and Islamic
regimes in the Middle East and communist governments in Vietnam and China are
invaluable and are a clear sign of the persuasive power of the Vatican.
Next, I will examine two contextual theological perspectives of business ethics. The
two contextual theologies are Latin American liberation theology and North American
neocon theology. These contextual theologies are chosen for two specific reasons.
First, the influence of both theologies has gone way beyond intraecclesial and
theological circles. In the second place, I have experienced both contextual theologies
at the personal and professional level. Since the early 1990s, I have had the privilege
to work in base communities in the Baixada Fluminense, the metropolitan area of Rio
de Janeiro, Brazil. Liberation theology has a huge impact on the pastoral practices of
local church communities in this economically impoverished area. Since the mid
1990s, I have also been working on Wall Street as an investment banker, an
environment heavily influenced by North American neoconservatives. The main part
of this occasional paper is therefore an attempt to systematize my personal
experiences and evaluate the epistemological tools and ideological assumptions of
these contextual theologies.
It is my working hypothesis that moral theology and business ethics should be

publicly argued in order to remain vibrant, alive and accessible. Such is the only
method to make the business ethics debate a voice heard in the corporate boardrooms,
governments, churches and academia alike. A critical assessment of the business
ethics hype is therefore a must.
4
Pope John XXIII (1961), Mater et Magistra, Vatican, May 15, 221. All encyclical excerpts in this
paper are taken from the Vaticans website, www.vatican.va.
7
Terminology
In order to avoid conceptual misunderstandings or cultural bias, a few comments on

terminology are necessary. I will highlight the terms and concepts, which will be used
or avoided throughout this occasional paper.
In the United States, academics use the concept of business ethics as an umbrella term
to encompass matters related to social and environmental sustainability or
stewardship. In continental Europe, the most widely used umbrella term is corporate
social responsibility. One of the better definitions of the concept comes from
LouvainlaNeuve Professor Philippe Van Parijs, who describes CSR as as doing
more for the good of society (or less for the bad of society) than what follows from
effectivelawabiding, imageinsensitive profitseeking.5 Within the scope of this
occasional paper, both terms are interexchangeable. Both terms are born in the West
and largely devoted to the study of Western multinational corporations.
Despite a vast and evergrowing body of academic literature and corporate manuals,
defining business ethics or corporate social responsibility is not as easy as it might
appear at first. Research on the issue still lacks a comprehensive framework for the
systematic collection and analysis of corporate data. As will become clear, diverging
levels of economic development result in different assumptions. Advocates of
business ethics or corporate social responsibility argue that corporations have entered
a stage in which their activities are expected to create value in three dimensions. On
the first level, corporations have responsibilities towards people, as its policies affect
issues related to employment, health, education, and human rights. The second
dimension involves the planet. In this sense, corporations are expected to contribute
towards a clean environment, preservations of resource stocks or ecological balance.
The third level concerns profit. At this level, corporations are expected to be
financially sound, at least warranting economic and financial continuity. The tripod
peopleplanetprofit is also referred to as triple bottom line management. In
theological jargon the tripod respectively refers to human dignity, stewardship and
cocreation.
The notion of corporation will play a key role throughout this paper. A corporation is
created by a group of shareholders who have ownership, represented by their holdings
of common stock. Shareholders elect a board of directors and generally receive one
vote per share. The board appoints and oversees the management of the corporation.
Although a corporation does not necessarily have to be for profit, the vast majority of
corporations are set up with the goal of providing a financial return for its
shareholders. By going public, a corporation often gets a listing on a stock exchange,
where it is traded and priced according to the laws of supply and demand. When you
purchase stock, you are becoming part owner in a corporation. A corporation should
also be regarded as an agent of change or social constructor, receptive to signals from
society and directly interfacing with the natural environment. Nowadays corporations
move, operate and exist beyond nations borders and make their presence felt. The
5
Van Parijs, Philippe (2002), The Spotlight and the Microphone: Must Business Be Socially
Responsible, and Can It? LouvainlaNeuve: Chaire Hoover dthique Economique et Sociale, p. 2.
8
global corporations gathered at the 2007 World Economic Forum in Davos, for
example, have combined annual revenues of $12 trillion, almost the value of the
entire economy of the United States. As will become clear throughout this study,
corporations no longer only make products; they also define and market culture.
The concept of corporation and not company will be employed throughout this
study because the former is the most commonly used legal name for a forprofit
business association. Although the concept of company nowadays connotes a
commercial enterprise, historically it has also referred to religious organizations the
Jesuits are know as the Company of Jesus and military groups. The concept is
derived from the Latin word cum and panis, which when put together mean breaking
bread together. The notion corporation, moreover, comes from the Latin corpus,
which means body.
In general, economics will be understood as a critical study of production, distribution

and consumption of wealth in society. In the line of Adam Smith and Amartya Sen,
economics is also regarded as a moral science. Such understanding highlights the fact
that moral philosophy and the discipline of economics are intrinsically intertwined.6
The term free market will be used throughout this study and is defined as a
mechanism for producing, distributing and exchanging, buying and selling of goods
and services. The free market encompasses the entire set of human interactions that
occur when such goods and services are offered. The economic model of competitive
free markets analyzes and predicts how prices are determined when private,
unregulated markets operate under certain assumed conditions. In the United States,
the term free has mostly a positive connotation. Milton Friedman even argues that
departures from the competitive free market model are irrelevant.7 According to
Harvard Professor John Kenneth Galbraith, money is a singular thing [...] it has
oppressed nearly all people in one or two ways: either is has been abundant and very
unreliable or reliable and very scarce.8 In contrast, Joseph Stiglitz argues that the free
markets model is far from ideal.9 The winner of the 2001 Nobel Prize in economics
blames market fundamentalism for endorsing the view that free markets solve all
problems flawlessly. In continental Europe, especially in France, the term has often
gained a rather negative connotation and is often depicted as a caricature. Former
French Prime Minister Edouard Balladur once memorably asked: What is the
market? It is the law of the jungle, the law of nature. And what is civilization? It is the
struggle against nature. Former French Prime Minister Lionel Jospin has said yes to
market economy, no to market society.10 As will become evident throughout this
study, there is no consensus in academia and the business community on the pros and
cons of the free market model.
6
For their line of argument, see: Smith, Adam (1759), The Theory of Moral Sentiments, Oxford:
Clarendon Press (1974 edition) and Sen, Amartya (1986), On Ethics and Economics, Oxford: Basil
Blackwell.
7
Friedman, Milton (1962), Capitalism and Freedom, Chicago: University of Chicago Press.
8
Magnus, George (2006), Capital Flows and the World Economy: Petrodollars, Asia and the Gulf,
London: UBS Investment Research, November 27.
9
Stiglitz, Joseph (2003) Globalization and Its Discontents, New York: W. W. Norton & Company.
10
Beattie, Alan (2006), US Faces Globalization without Safety Net, Financial Times, November 5.
9
In this occasional paper, the term capitalism will be avoided, because it is a broad and
illdefined concept, often used and abused in political agendas and ideological
debates. Only in the United States, the concept has a profoundly positive connotation
as a legitimatization of the free market, implying liberty, entrepreneurship, initiative
and progress. In Europe, the notion is more linked to the dark forces of globalization
and economic monopoly or cartels. In Latin America, the concept is thoroughly
negative and has become a synonym for oppression, marginalization and exploitation.
In order to avoid an ideological debate, which would go nowhere, the controversial
term will not be used.
Although still used in too many academic and ecclesial circles, I will avoid using the
obsolete concept of Third World. This concept is denigrating as it systematically
categorizes twothird of the worlds population as thirdclass citizens. Historically,
the notion connotes countries receiving development aid and countries not as
industrialized or as technologically advanced as OECD countries. Instead, I will use
the term emerging markets, which has a more positive connotation as it points at the
tremendous socioeconomic and political potential of countries in the South. The term
emerging markets was first coined by World Bank official Antoine van Agtmael in
1981.
Business ethics started to surface in the 1970s sparked by a new environmental

awareness and suspicion or even outright hostility towards multinational conduct. The
empowerment of nongovernmental organizations especially Amnesty
International, Greenpeace, and Oxfam concerned with social justice and
humanitarian relief services, took center stage. Ever since the early 1970s, non
governmental organizations have been busy publicizing corporate misconduct. Highly
publicized cases involved Nestl, Union Carbide, Exxon and Shell, which have led to
consumer boycotts and huge reputational damage.11 Public scrutiny has led these and
other corporations to adopt stringent business ethics policies, aimed at enhancing
moral legitimacy. Some popular sociology and economics books related to business
ethics have even become bestsellers.12
The vogue of business ethics, however, does not mean that there is a consensus on
theoretical models and professional implementation. Corporations are nowadays
inundated with requests to implement business ethics policies without a clear
consensus on what should to be achieved. Harvards Michael Porter warns that
business ethics often looks like an all a defensive effort, a PR game in which
companies primarily react to deal with the critics and the pressure from activists.13
His concern is that corporations are reacting to pressure rather than having their own
affirmative strategies. Amnesty Internationals Frankental classifies much business
11
For an indepth analysis of these cases see: Van de Ven, Johannes (2003), The Rise of Ethics in
Corporate Management License to Operate or Moral Vanity? London: Swiss Consulting Group,
Occasional Paper # 12, August 8.
12
The two most widely read books are Naomi Kleins No Logo (London: Harper Collins, 2000) and
Eric Schlossers Fast Food Nation: the Dark Side of the AllAmerican Meal (New York: Houghton
Mifflin, 2002). A search on Google for business ethics or corporate social responsibility (CSR) will
give you instant access to 30,000 websites. Over 100 million pages on the worldwideweb are directly
related to business ethics. Amazon lists over 1000 books on the issue.
13
European Business Forum (2003), CSR a Religion with Too Many Priests? Interview with
Michael Porter, Copenhagen Business School, September.
10
ethics as corporate PR, stressing that free markets do not reward ethical business.14
Gauging a good corporate citizen is indeed hardly a straightforward business.
Google, for example, made the 2007 Worlds Most Ethical Companies list of
governancetracker Ethisphere, because of its strong code of conduct. At the same
time, the internet powerhouse has been widely criticized by consumer groups over
privacy infringements and its China policy. The business ethics debate seems never
short of prophets, preaching either prosperity or doom. From the outset, it is clear that
there are no clearcut formulas for resolving ethical quandaries.
14
Frankental, P. (2001), Corporate Social Responsibility A PR Invention? Corporate
Communications 1, pp. 1823.
11
PART I
PHILOSOPHICAL FOUNDATIONS OF BUSINESS ETHICS
1. The Modern Debate in Historical Perspective
In order to better understand the dynamics of business conduct in the era of

globalization, it is imperative to first examine the philosophical foundations of the
freemarket economy. The roots of the dominant academic view can be found in the
writings of Adam Smith, Friedrich Hayek and Milton Friedman. Each writer has a
rich tradition of debating morality, freedom of choice and justice. As their viewpoints
have been crucial in establishing and consolidating freemarket economics, an inquiry
in contemporary business ethics necessarily has to start with an examination of their
assumptions and positions.
1.1. Adam Smith
Contemporary business ethics has its philosophical roots in the ideas of the Scottish
moral philosopher and political economist Adam Smith (17231790). His extensive
writings were a revolutionary event for the emancipation of the discipline of
economics and the formation of the freemarket economy. Any inquiry on business
ethics should therefore necessarily start with the father of capitalism.
Before examining his writings, a few words on the world in which Smith lived. The
belief that there exists a direct link between religious values and business concepts
was commonplace. In his time, the clergy exercised power over all dimensions of
community life. Religious principles claimed direct authority over economic affairs.
Commodity prices and wages were governed by what was considered a fair standard,
not by market forces. Obtaining a profit in economic life was justified in religious
terms. In other words, religious and economic realities were closely intertwined.
Smiths major concern was related to freeing economics from the tutelage of theology
and making it an independent discipline. It is crucial to realize that his freemarket
theories sought first and foremost freedom from church authorities and theologians,
not necessarily from the state. Although it would take another century before
economics was freed from political sciences, it was Smith who kicked off the debate.
This contribution is often underestimated or overlooked in contemporary economics
textbooks.
When Smith published An Inquiry into the Nature and Causes of the Wealth of
Nations (1776), he stated that the Church of Rome (the Vatican) posed the greatest
threat to the civil order, liberty and happiness of humankind. His magnum opus,
which was coincidentally published in the year of the American Declaration of
Independence, is often cited as the bible of capitalism and free enterprise.15 He argued
15
The title alludes to the Book of Zechariah 14:14.
12
that church charities should be contained so it would not disturb the state.16 In this
book, he conducted an empirical study on why England, France, and Poland were
wealthier than other European nations in the 18th century. Smith concluded that the
division of labor and the free competitive market contributed significantly.
According to Smith, an important step toward the achievement of perfect liberty,

was to increase the power of the state over the power of the church. In attacking the
socalled Poor Laws, Smith attacked the charity, which he considered as oppressive
and only creating dependence. He also argued that the educational system had to be
transformed: The alterations which the universities of Europe thus introduced into
the ancient course of philosophy were all meant for the education of ecclesiastics, and
to render it a more proper introduction to the study of theology. Because of the
temporal powers, which the church was enjoying, Smith argued that the greater part
of what is taught in schools and universities [...] does not seem to be the most proper
preparation for the real business of the world.17
Smith argues that a freemarket mechanism legitimizes the pursuit of selfinterest:

goods can be produced more efficiently and cheaply if each person strives to
maximize his or her selfinterest in the market place. By pursuing ones own interest
in a perfectly competitive market, one automatically attains an optimal social
outcome. The interests of morality are best served by business selfishness: Every
individual generally, indeed, neither intends to promote the public interest, nor knows
how much he is promoting it [...] he intends only his own gain, and he is in this, as in
many other cases, led by an invisible hand to promote an end which was not part of
his intention. Nor is it always the worse for society that it was no part of it. By
pursuing his own interest he frequently promotes that of the society more effectively
than when he really intends to promote it. I have never known much good done by
those who effected trade for the public good.18 By acting as such, individuals
promote general prosperity and therefore unintentionally help others. From a
utilitarian point of view, price agreements between corporations are undesirable as
they reduce market efficiency. Although the metaphor of an invisible hand is only
used twice in his entire works, it is regarded as his most noteworthy contribution to
the debate.
In his optimistic theories on the reality of human sympathy, there is no room for
conspiracy theories: It is not from the benevolence of the butcher, the brewer or the
baker that we expect our dinner, but from regard of their selfinterest. We address
ourselves, not to their humanity but to their selflove, and never talk to them of our
own necessities but of their advantages.19 This famous phrase is often considered to
16
Smith, Adam (1776), An Inquiry into the Nature and Causes of the Wealth of Nations, New York:
Oxford University Press (1976 edition), pp. 755777.
17
In his famous Principles of Political Economy, published in 1817, Ricardo followed up on Smiths
critique by arguing that the Poor Laws formed the habits of the poor so every friend of the poor
must ardently wish for their abolition.
18
Oxford University Press (1976 edition), p. 13. It is fair to mention that the American Reverend Joseph
Morgan created the doctrine of the hidden hand in The Nature of Riches in 1732, many decades before
Smith would launch his theory of the invisible hand.
19
Oxford University Press (1976 edition), p. I. ii. 2.
13
be a problem for Christian ethics because of its explicit endorsement of selfinterest.

By legitimizing the maximization of selfinterest, Smith changed a widely spread
perception in society. He hoped that governments would understand the real driving
force behind wealth creation and therefore slap punitive tariffs on imports and
condone similar anticompetitive favors to industries and adopt freemarket
measures.
Unfortunately, Smith is mostly known by the doctrines exposed in the previous

paragraphs. In his other oftenundervalued masterpiece The Theory of Moral
Sentiments, published in 1759, Smith recognizes benevolence as a primary but also
scarce virtue.20 In Smiths worldview, selfinterest and the ethical concern for the
wellbeing of the other are not antagonistic but rather complementary and mutually
reinforcing.21 It is therefore unfair to accuse Smith of defending blindly the pursuit of
selfinterest at the expense of social and civic duties or overall moral restraints. As
Patricia Werhane points out, Smith does not set up a dichotomy between egoism and
benevolence. Rather, he criticizes both moral theories that derive the basis for moral
judgments from selfinterest and moral theories that find the sole end of morality to
be benevolence.22 In other words, Smiths notion of selfinterest is not asocial or
antisocial, it is intrinsically social, nor as a matter of moral duty or social pressure,
but rather a genuine source of pleasure for its own sake.
In the same line, Amartya Sen emphasizes that the fact that Smith noted that
mutually advantageous trades are very common does not indicate at all that he
thought selflove alone, or indeed prudence broadly construed, could be adequate for
a good society.23 Smiths ethical theory is based on a utilitarian acceptance of human
desire for material prosperity as the ultimate concern of society. Toon Vandevelde
equally reiterates that the relationship between economics and ethics in Smiths
writings is more complex and more interesting than often suggested. He emphasizes
that Smith has a much broader understanding of economics than is the case in neo
classical economics. Smith did not disconnect economics from moral philosophy.24
In sum, by overemphasizing the theory of the invisible hand and the moral
justification for the profit motive, Smith has erroneously been regarded as the ultimate
defender of unfettered competition. The widespread belief that ever since Smith labor,
land, and capital have become equivalents for wages, rent, and profit, is not true. The
misinterpretation of his theories of sentiment, sympathy, benevolence and prudence
has been causing a widening of economics and ethics with dramatic consequences.
According to Smith, justice is a derivative of perfect liberty, which in turn is a
prerequisite for the wellfunctioning of the freemarket system. Smiths popular
reputation as the rationalizer of greed is therefore incorrect. As convincingly argued
by outspoken business ethics Professor Luc Van Liedekerke: Adam Smith said that
there is a positive side to greed, because it encourages spending and hence bolsters the
20
Smith, Adam (1759), The Theory of Moral Sentiments, Oxford: Clarendon Press (1974 edition).
21
James, Harvey & Farhad Rassekh (2000), Smith, Friedman, and SelfInterest in Ethical Society,
Business Ethics Quarterly, 3, pp. 663664.
22
Werhane, Patricia (1991), Adam Smith and His Legacy for Modern Capitalism, New York: Oxford
University Press, p. 23.
23
Sen, Amartya (1986), On Ethics and Economics, Oxford: Basil Blackwell, p. 23.
24
Vandevelde, Toon (1993), Sympathie en eigenbelang; in: Boey, K.; Vandevelde, Toon, Van
Gerwen, J. (editors), Een prijsvaardige economie, Louvain: Centrum voor Ethiek, p. 14.
14
economy. That was in the eighteenth century, and was a new concept at the time.
However, he was not defending a laissez faire capitalism with no structure: he
realized that greed must be kept within certain bounds, otherwise things will go
seriously wrong.25
1.2. Friedrich Hayek
The first distinguished intellectual after Adam Smith, who defended the freemarket
model with the same vigor, was the Austrianborn Friedrich August von Hayek
(18991992).26 He won the Nobel Prize in Economics together with Swedish
economic liberal Gunnar Myrdal in 1974. This great intellectual was also
characterized by the fact that he hardly ever attributed to opponents anything beyond
intellectual error. According to Hayek, knowledge is something that is hard to claim
ownership over since others can absorb it free of charge.27 Hayeks social and
economic philosophy elaborates on Adam Smiths line of thought and is integrated in
a comprehensive and remarkably consistent manner. For the scope of this study, this
study will concentrate on two of his masterpieces, The Road to Serfdom (1944), and
The Constitution of Liberty (1960). These two books stand out among his 25 books
and 130 articles in economic theory, political and legal philosophy, intellectual
history and psychology.
Hayek is best known for writing The Road to Serfdom. This book was an instant
success and transformed Hayek into a leading albeit controversial social theorist. In
this nont technical book, first published at the end of the Second World War, he
warns the greater public that the road to political hell is paved with the best intentions.
His primary concern was to show that classical liberalism and central planning had
one shared goal enhancing the wellbeing of the greatest number of people but
had sharply diverging proposals to achieve such goal. His main objective was to show
that one state intervention would inevitably lead to another governmental
intervention.
Against the consensus of the postSecond World War period, Hayek rejected
economic planning, comprehensive state welfare services, and the redistribution of
incomes. The unintended consequences of market interventions are economic
distortions and political intrusions. Governmental policies might have noble intentions
but they are based on a misguided epistemology of collectives and institutional
arrogance. In his own words: That democratic socialism, the great utopia of the last
few generations, is not only unachievable, but that to thrive for it produces something
25
Buys, Anton (2005), Interview with Prof. Dr. Luc Van Liedekerke, Louvain: January 14. The
insightful interview is available at www.exxonmobil.nl
26
Hayek became a Doctor Rerum Politicarum at the University of Vienna in 1923. His academic
debates with Ludwig von Mises, the leading economist of the Austrian school, had a lasting impact on
his own career. In the same year, he became a research assistant at the New York University. After his
Habilitation, he became the first foreign professor at the London School of Economics, where he was
the only intellectual opponent of John Maynard Keynes. In 1950, he accepted a professorship in social
and moral sciences at the University of Chicago and established a close intellectual relationship with
Milton Friedman.
27
Butler, Eamonn (1983), Hayek: His Contribution to the Political and Economic Thought of Our
Time, London: Temple Smith, pp. 1213.
15
so utterly different that few of those who now wish it would be prepared to accept the
consequences, many will not believe till the connection has been laid bare in all its
aspects.28
For Hayek, socialism is a false secular religion, doomed to fail. Arrogation of

economic control by social planning is a fatal conceit.29 The socialist interventionist
dynamic leads a society down the road to serfdom. He rejected socialism as it has a
mistaken view of reason and rationality. Socialism erroneously imagines that a society
should be organized from top to bottom, geometrically, like a pyramid. In arguing as
such, socialism does not allow for the contingency inherent to temporal events and
also for liberty aspired by humanity. Hayek dedicated his book The Road to Serfdom
To the Socialists of All Parties, without claiming ever that socialists had bad
intentions, but only warning their followers of the fallacies at the theoretical and
practical level. The fact that Hayek gave such warning in 1944, at the eve of naive
leftist belief, which led to misleading collectivist policies, makes this book
remarkable.
In his monumental The Constitution of Liberty, Hayek first tries to define the concepts
of freedom and liberty. According to Hayek, this is crucial since these notions have
been abused and their meaning distorted. He argues that the word liberty means
nothing until it is given specific content, and with a little massage it will take any
content you like. Hayek warns that there is a danger of confusion in the definition of
political freedom as people may vote or contract themselves into slavery and thus
consent to give up freedom in the original sense: It would be difficult to maintain
that a Jesuit who lives up to the ideals of the founder of his order and regards himself
as a corpse which has neither intelligence nor will could be so described.
According to Hayek, the definition of liberty depends on the meaning of the concept
of coercion, arbitrariness and general rules or laws. By coercion, Hayek understands
such control of the environment or circumstances of a person by another that, in
order to avoid greater evil, he is forced to act not according to a coherent plan of his
own but to serve the ends of another.30 Hayek favors the observance of general non
discretionary rules instead of arbitrary laws in order to derive fundamental political
and economic policies of a free society.31 This is regarded crucial since society is too
complex, beyond the capability of any single mind to understand and therefore
impossible to plan: If we are to understand how society works, we must attempt to
define the general nature and range our ignorance concerning it.32
Hayek equally stresses the limits of law and legislation. The ability to address and
solve social problems through statutory enactment of rules is severely limited and has
serious downsides. Inspired by Kant, Hayek argues that laws should not seek to
28
Hayek, Friedrich (1944), The Road to Serfdom, London: Routledge & Kegan Paul (1976 edition),
p. 23.
29
Hayek, Friedrich (1988), The Fatal Conceit, New York: Routledge.
30
Hayek, Friedrich (1960), The Constitution of Liberty, London: Routledge & Kegan Paul (1976
edition), pp. 721.
31
Brittan, Samuel (1995), Capitalism with a Human Face, Brookfield, Vermont: Edward Elgar, pp.
113126.
32
edition), p. 23.
16
achieve particular, concrete consequences but, instead, establish general rules that set
a broad framework where people in a free society can interact. Law, nevertheless, is
for Hayek not identical to coercion or arbitrariness. Again inspired by Kant, Hayek
argues that the absence of law would not lead to the elimination of coercion but rather
to the proliferation of it. Law, as an institutionalized use of coercion by the
government, is meant to maximize the degree of freedom that each person can enjoy
without impinging on the liberty of others. According to Hayek, the best way to
guarantee such a situation is to only focus on general rules of conduct. In summary,
the only purpose of a freedommaximizing and coercionminimizing legal
framework is to provide a level playing field. Any attempt to impose particular
legislation is doomed to failure since it always produces an unknown and
unpredictable number of unintended damaging social side effects.
Hayek applies the same logic to the field of social justice. According to Hayek, this
notion is not, as most people probably feel, an innocent expression of good will
towards the less fortunate. He warns: It has become a dishonest insinuation that one
ought to agree to a demand of some special interest which can give no real reason for
it. Moreover, it is wholly devoid of meaning or content, is one which by its very
nature cannot be proved. The employment of the concept of social justice has
furthermore become an instrument of ideological intimidation, for the purpose of
gaining the power of legal coercion in redistribution of wealth of which money is a
proxy. For Hayek, social justice will only worsen the chances of just relationships
between individuals and eventually undermine the wellfunctioning of the wider
society. Ruthless politicians and careless thinkers have transformed social justice into
a utopian goal. Hayek concludes that the social justice has become an excuse for
people who lack the patience and faith to build up voluntary organizations or charities
and an excuse for the state to centralize power.33
Hayek does not justify free markets by reference to a preferred set of moral principles.
He defends the market mechanism by praising its capacity to generate, transmit and
use knowledge in an efficient way. The market does not depend on people working
hard, but rather depends on providing goods and services desired by people at the
right time and the right place. For Hayek, the market represents no intrinsic value but
instead value to others of goods and services and the efforts of the individual who
supplies it. The market is driven by an incentive to future action and to deliver on the
desires of others. Unlike Karl Marx (18181883), who argued that the value of a
product was determined by the amount of labor invested in it, Hayek argues that free
market forces inform producers how much labor and expertise is worth putting into a
product.
The market is a human institution, like language and law, not devised by a conscious
plan but gradual, constantly changing, evolutionary process. The market is not a
means of efficiently allocating known resources, but rather a discovery procedure.
The main benefit of the market system is that it provides a method for coordinating
human activity without political interference or governmental enforcement. The role
33
Hayek, Friedrich (1976), Social or Distributive Justice, Chicago: The University of Chicago Press;
in: Nishiyama, Chiaki & Kurt Leube (1984), The Essence of Hayek, Stanford, California: Hoover
Institution Press, pp. 96100.
17
of profit is stimulating individuals to discover new opportunities and untapped

resources. Profits enhance society.
With regard to religion, Hayek argues that it has played a crucial role in the
development of humankind throughout all ages of history. Religions are important in
reinforcing a moral code on a society, especially in enshrining the institutions of
private property, honesty and the family. Only religions that protect and preserve
these institutions have the ability to survive in history. Along the same lines as Smith,
Hayek argues that even agnostics ought to be grateful to the religious traditions
which, for reasons they cannot accept, have preserved long enough [...] nonrational
beliefs that made available the building elements of the extended order which we call
civilization.34 Hayek attributes the declining influence of religion in his time to a
lack of intellectual and moral orientation.35 In this same spirit, he would declare
fifteen years later that unlike the rationalism of the French Revolution, true
liberalism has no quarrel with religion, and I can only deplore the militant and
essentially illiberal antireligionism which animated so much of nineteenthcentury
Continental liberalism. He emphasizes: What distinguishes the liberal from the
conservative here is that, however profound his own spiritual beliefs, he will never
regard himself as entitled to impose them on others and that for him the spiritual and
the temporal are different spheres which ought not to be confused.36 For Hayek,
religion should be confined to the family living room and not be extended to the
public square.
In sum, Hayek restored economics as a field worthy of investigation by moral

philosophy. He argues that honest dealing, security of property, and the sanctity of
contract are the bulwarks of liberty and safeguards of capitalism. He has convincingly
argued that society is tragically open to being manipulated by fundamentalist
doctrines or secular religions such as Marxism. In one of his last publications,
released in 1979, Hayek declared that the final conclusion of forty years of study
was that we must shed the illusion that we can deliberately create the future of
mankind.37 Hayeks extraordinary insights should remain mandatory reading not
only for monetary economists but also for business ethicists and moral theologians.
1.3. Milton Friedman
The fourth child of European immigrants in America and recipient of the 1976 Nobel
Memorial Prize for economic science has equally been crucial for shaping the
contemporary economics debate. As a professor at the University of Chicago, Milton
Friedman became the leading advocate of the monetarist school of economics, which
holds that the business cycle is and should be determined primarily by money supply
34
Hayek, Friedrich (1983), The Origins and Effects of Our Morals: a Problem for Science, Lecture
delivered at the Hoover Institution, November 1; in: Nishiyama, Chiaki & Kurt Leube (1984), The
Essence of Hayek, Stanford, California: Hoover Institution Press, p. 322.
35
Hayek, Friedrich (1945), The Twelfth Lecture, delivered at University College, Dublin, December
17; in: Nishiyama, Chiaki & Kurt Leube (1984), The Essence of Hayek, Stanford, California: Hoover
Institution Press, p. 132.
36
edition), p. 407.
37
Hayek, Friedrich (1979), The Political Order of a Free People, London: Routledge, p. 152.
18
and interest rates rather than by a governmental intervention.38 Although mostly

famous for his interpretations on monetarism, this study will only focus on his
contributions in the field of moral philosophy and business ethics.
The concept of freedom is crucial to understand Friedmans theories. He asserts that

freedom of the individual or perhaps the family is the ultimate goal of judging
social arrangements. Freedom is the ultimate criterion to judge or advance a society. It
is also the basis for selfinterest and motivation for human action. Along the same
lines as Hayek, he argues that individual freedom should be encouraged, while
restriction or coercion should be avoided. Friedmans belief in personal freedom and
free markets extends to a very wide variety of areas. He even regarded American
antidrugs laws as virtually a government subsidy for organized crime.39
Friedmans main hypothesis is therefore that an optimal condition for the whole
society will be achieved naturally if all individuals and corporations alike pursue their
own selfinterest.40 To put it even more bluntly, it is a moral duty of corporations not
to get involved with moral demands. In Friedmans conception, a corporation is an
artificial personality. Only its employees have moral duties. The moral duty of an
employee is to act amorally. In Friedmans classic stockholder model, corporations
have a primary responsibility towards the stockholders only, to whom they are bound
in a fiduciary relationship. A business is property of shareholders. Business
relationships are not immoral but they are simply not subject to the moral constraints
and practices covering social relationships. Moral responsibility is therefore a void
concept in the context of corporate business. This does not imply that corporate
managers have a moral blank check that allows them to close their eyes to all ethical
constraints in the relentless pursuit of profits. According to Friedman, corporations
have to pursue profit by legal, non deceptive means only.
According to Friedman, individuals should be guided by the concept of selfinterest.

His definition of selfinterest is not myopic selfishness, but rather it is whatever it
is that interests the participants, whatever they value, whatever goals they pursue: the
scientist seeking to advance the frontiers of his discipline, the missionary seeking to
convert infidels to the true faith, the philanthropist seeking to bring comfort to the
needy, all are pursuing their interests, as they see them, as they judge them by their
38
Friedmans intellect is behind the dissolution of the Keynesian consensus. In his 1967 Presidential
Address to the American Economics Association, he criticized the Phillips curve, a theory which
suggested that higher inflation would permanently reduce unemployment, or vice versa. Friedman
argued that unemployment in the long run would settle at its natural rate, irrespective of the level of
inflation. In his monetarist perception, less money eliminates inflation, without causing higher
unemployment in the longer run. The crux of the Friedman argument is that the economy is inherently
stable, unless disturbed by erratic monetary growth. If the economy is facing some turbulence, it will
fairly quickly return to longrun equilibrium and settle around that socalled natural rate of
unemployment. Friedman advocates a low level of activist stabilization policies, both at the monetary
and fiscal level. In his view, there is no need for proactive governmental stance as intervention only
distorts markets.
39
Brittan, Samuel (2006), Milton Friedman, Economist, Dies Aged 94, Financial Times, November
16.
40
Friedman, Milton (1962), Capitalism and Freedom, Chicago: University of Chicago Press, p. 26.
His magnum opus is based on the idea that money is the most important determinant of an economy.
His emphasis on the impact of money supply is also known as monetarism.
19
own values.41 Friedman compares business to a game, which goal is to maximize

profit while staying within the rules of the game.
In his widely read Capitalism and Freedom, published in 1962, Friedman equals the
social responsibility to a fundamentally subversive doctrine. He argued that the
view that corporate officials and labor leaders have a social responsibility that goes
beyond serving the interest of their stockholders or their members is based on a
fundamental misconception of the character and nature of a free economy. In a free
economy, there is one and only one social responsibility of business to use its
resources and engage in activities designed to increase its profits so long as it stays
within the rules of the game, which is to say, engages in open and free competition,
without deception and fraud.42 In his view, business relationships are not immoral
but they are simply amoral, not subject to the moral constraints and practices covering
social relationships. Corporations cannot possess responsibilities.
According to Friedman, businessmen who believe that business has a social

conscience and takes seriously its responsibilities for providing employment,
eliminating discrimination, avoiding pollution and whatever else may be the
catchwords of the contemporary crop of reformers, are preaching pure and
unadulterated socialism. Moreover, businessmen who talk this way are unwitting
puppets of the intellectual forces that have been undermining the basis of a free
society these past decades.43 He compares corporate donations with hypocritical
windowdressing, unauthorized taxation and even tactics approaching fraud. In other
words, a nonbusiness oriented donation is tantamount to theft and it equals
unjustified appropriation of the owners property. Friedman argues that business
managers who employ funds for anything going beyond the explicitly and
legitimately stated business objective are simply embezzling. The fact that the
diverted resources are applied to supposedly noble ends does not make the act of
diverting any less larcenous. Wrongdoing is not annulled by worthy motives. For
example, if employees are using telephone lines for personal use rather than to solicit
or engage in business, he is cheating the business owners.
For Friedman, businesspeople should not intentionally seek to promote justice

because the beneficial impact for society is not empirically evident. The use of
stockholders money for nonprofit purposes is morally wrong. Corporate employees
are only encouraged to spend their private money towards social ends and use their
spare time towards social goals. Only the owners or shareholders can decide whether
a corporation should have any social goals. Friedman asserts that the debate on the
social responsibilities of business is notable for their analytical looseness and lack of
rigor. He equates social responsibility with the pursuit of social ideals at the personal
levels. Such ideals have to be realized at the individuals own expense. He concludes
that freedom of the individual or perhaps the family is the ultimate goal of judging
social arrangements.44
41
Friedman, Milton & Rose Friedman (1990), Free to Choose, San Diego, California: Harvest.
42
43
Friedman, Milton (1970), The Social Responsibility of Business is to Increase Its Profits, New
York Times Magazine, September 13, pp. 3233.
44
20
Besides this deontological argument, Friedman also uses teleological arguments for
defending his thesis that corporations and business executives only should pursue
profit. In paraphrasing Smith, he argues that individuals best promote the wellbeing
of society by pursuing ones own interest. In his own words: Few trends could so
thoroughly undermine the very foundations of our free society as the acceptance by
corporate officials of a social responsibility other than to make as much money for
their stockholders as possible. This is a fundamentally subversive doctrine. If
businessmen do have a social responsibility other than making maximum profits for
stockholders, how are they to know what it is? Can selfselected private individuals
decide what the social interest is? Can they decide how great a burden they are
justified in placing on themselves or their stockholders to serve that social interest?45
According to his logic, social engineering is doomed to failure for several reasons:
corporate managers do not have the necessary skills or expertise to arbitrate between
competing claims of different sections of society such competence is only given to
an elected government; corporate managers are not elected and have therefore no
political mandate to decide between competing claims for resources again, such
competence is only given to an elected government; and, finally, corporate managers
do not have the means and resources of elected governments to make things happen
once society has decided what the appropriate tradeoff must be. Friedman concludes
that social engineering leads to money politics, undermining the legitimacy of both
business practices and politics. In short, managers should stay out of the business of
politics, as much as politicians should refrain from the business of management.
According to Friedman, governments and firms do have a social responsibility to keep
prices and wage rates down in order to avoid price inflation. He argues that price
controls, whether legal or voluntary, if effectively enforced would eventually lead to
the destruction of the freeenterprise system and its replacement by a centrally
controlled system. Friedmans doctrine of fiduciary duty has dominated the business
culture in the United States and the United Kingdom since Reagan and Thatcher took
power in the early 1980s.
Friedman rigorously defends personal freedom combined with a belief that free
markets are the best place to coordinate the activities of dispersed individuals to their
mutual enrichment. In the academic debate, it too often goes unmentioned that he
himself added an important qualifier to making money or profit seeking, namely that
it should be done while conforming to the basic rules of society, both those
embodied in law and those embodied in ethical custom. Scholars therefore have
often incorrectly written him off as a rightwing Republican, overlooking the fact that
he has often vigorously attacked governmental subsidies and protectionist measures.
Friedmans arguments are flexible enough to permit and even encourage todays
managers to engage in corporate actions protective of both profits and community
wellbeing.
It can be concluded that Friedmans assumptions have led to a widespread belief that
modern economic theory should be quantifiable and rational. Human beings have
increasingly been assumed to behave rationally in subsequent economic modeling.46
45
46
A mathematical approach to economics actually started after the Second World War, when MIT
Professor Paul Samuelson launched his famous Foundations of Economic Analyses. In his masterpiece,
21
A growing academic consensus grew that economics should be driven by ahistorical,

rational, econometric modeling. The arguments were been further advanced by
economists at the University of Chicago in the late 1960s. The neoclassical approach
reached its peak at the 1969 Annual Meeting of the American Finance Association,
when Professor Eugene Fama famously argued that in an efficient market, prices
fully reflect available information. When UCLAeconomist William Sharpe
received the 1990 Nobel Prize in Economic Sciences, the neoclassical theory had also
reached the temple of Wall Street. By creating a simple measure of risk based on past
asset volatility, the efficientmarket gospel became a global belief. His sophisticated
risk measurement tool the socalled beta measures whether active money
managers can outperform the market by taking on extra risk.
Neoclassical economics has also led to the stockholder model. This model was
introduced in the 1960s and basically holds that the owners of shares of stock should
be the prime beneficiaries of the activities of a corporation. The stockholder model is
based on the socalled agency theory. This theory holds that shareholders differ from
other constituencies by virtue of being residual riskbearers, and therefore best
placed to exercise control over a corporation. The agency theory asserts that
shareholders are in the best position to ensure that firms operate efficiently and focus
incessantly on profit maximization.
The most influential freemarket economist of the twentieth century died in

November 2006, aged 94. According to Harvard Professor Lawrence Summers, no
contemporary economist anywhere on the political spectrum combined Mr.
Friedmans commitment to clarity of thought and argument, to scientifically
examining evidence and to identifying policies that will make societies function
better.47 Or in the words of Mario Vargas Llosa, millions of people who have never
heard of him lead better lives today in part because his ideas proved more resilient
than the prejudices that surrounded his name, than the social engineers who tried to
impose their bureaucratic whims under the cloak of altruism, or the police states that
thought themselves eternal.48 Friedmans legacy is here to stay.
principles of economics were fully explained in mathematical terminology, such as Newtonian

calculus.
47
Summers, Lawrence (2006), The Great Liberator, New York Times, November 19.
48
Vargas Llosa, Mario (2006), A Man of Ideas, Washington Post, November 22.
22
2. Contemporary Ethics Models at Business Schools
The freemarket doctrine as formulated by Smith, Hayek and Friedman still

dominates much of Wall Street and permeates mainstream economics textbooks but
their views are increasingly being questioned in academia and business headquarters.
Due to theoretical inconsistencies and manifold practical deficiencies, the supreme
reign of the freemarket mindset or the stockholder model is no longer apparent.
In the next section, I will start highlighting the first cracks in the edifice of the
dominant academic view. Next, I will present three contemporary business ethics
models, which are popular, both at the academic and corporate level. Thomas
Donaldsons integrative social contract theory, Michael Porters contextfocused
strategic corporate social responsibility and Roger Martins virtue matrix have taken
the center stage at leading global business schools. These models are slowly being
incorporated into business ethics coursework and are becoming integral parts of
applied ethics. In the final section of this chapter, I will raise the question whether
establishing a paradigmatic shift in the debate is desirable and feasible
2.1. Beyond the Dominant Academic View
One of the first economists, who seriously questioned the dominant neoclassical
academic view, was John Kenneth Galbraith (19082006). In his magnum opus The
Affluent Society (1958), he rejected the abstract, mathematical models of neoclassical
economics as being divorced from reality. In A Short History of Financial Euphoria
(1990), he argues how irrational speculation often drives financial markets. More
recently, the business ethics has been enriched by welfare economics, which is also
directly relevant for the debate.
The second notable academic attack on the stockholder model occurred in the 1980s,
when business ethicists started to systematically condemn Friedmans model.
Wharton Professor Thomas Donaldson argued that the stockholder model is an
outmoded relic of corporate law that even the law itself has evolved. He argued that
such model is related to a myopic view of corporate responsibility, which would
lead to corporate Neanderthalism [...] with morally pernicious consequences.49
Donaldsons criticism was followed by Princeton Professor Robert Solomon, who
argued that Friedmans model is misguided from its nonsensically onesided
assumption of responsibility to his pathetic understanding of stockholder personality
as homo oeconomicus. Salomon argued that Friedmans proposition is not only
vacuous and misleading, it eclipses the larger picture and all those other purposes that
business is designed and managers are hired to serve. In a similar vein, he argued
that to give profits this sort of status is not only foolish in theory, but cruel and
dangerous in practice.50 University of Minnesota Professor Ian Maitland also argued
that the freemarket model releases selfinterest from moral restraints; it erodes all
49
Donaldson, Thomas (1989), The Ethics of International Business, New York: Oxford University
Press, p. 45.
50
Solomon, Robert (1992), Ethics and Excellence: Cooperation and Integrity in Business, New
York: Oxford University Press, p. 45.
23
social ties other than purely economic open and/or converts social relationships into
instrumental ones (commodifies them); it promotes a preoccupation with narrow
individual advantage at the expense of responsibility to the community or social
obligations; it substitutes competition for voluntary cooperation; it favors materialistic
or hedonistic values.51 University of Santa Clara Professor Manuel Velasquez argued
that Friedmans position on profit can only be used to justify a mangers unethical or
illegal conduct.52
These and other sharp indictment of the shareholder model led the appearance of the
socalled stakeholder model, which basically holds that not only stockholders have a
stake in a corporations operations. The alternative view argues that corporations must
balance the interests of multiple constituencies shareholders, employees, customers,
communities and, increasingly, the environment. According to University of Virginia
Professor Edward Freeman, stakeholders include those groups which have a stake in
or claim on the firm: [...] suppliers, customers, employees, stockholders and the local
community, as well as management in its role as agent for these groups.53 The
stakeholder theory is therefore based on the premise that the employees of a
corporation, especially its managers and directors, can be held accountable for
harmful sideeffects of corporate behavior.54 A widening of responsibility is
moreover deemed essential since stockholders liability is often remote and
financially limited.
Besides being an empirical management theory, the stakeholder model has also
become a normative theory of business ethics. The stakeholder concept, as a coherent
construct, provides a broad umbrella under which a wide range of normative positions
can be accommodated. According to Georgetown University Professor John Hasnas,
when viewed as a normative theory, the stakeholder theory asserts that, regardless of
whether stakeholder management leads to improved financial performance, managers
should manage the business for the benefit of all stakeholders.55 As managers must
give equal consideration to all stakeholders involved, conflicts of interest may arise.
Hence, in its normative form, the stakeholder model does imply that corporations do
have social responsibilities.
Despite its widespread acceptance in corporate and academic circles and increasingly
sanctioned by law in local or national jurisdictions, the stakeholder model has also
been increasingly criticized as insufficiently addressing business dilemmas. The model
is inadequate to address the existing conflict of interest among stakeholders.
Stakeholders are not a monolithic block with a coherent voice; they are mostly
sectional and competing constituencies seeking extramarket privileges from a
51
Maitland, Ian (1997), Virtuous Markets: The Market as School of the Virtues, Business Ethics
Quarterly, 1, p. 18.
52
Velasquez, Manuel (1998), Business Ethics: Concepts and Cases, Upper Saddle River, New
Jersey: Prentice Hall Press, p. 36.
53
Evan, William & Edward Freeman (1995), A Stakeholder Theory of the Modern Corporation:
Kantian Capitalism; in: Hoffman, W.M. & R.E. Frederick (1995), Business Ethics: Readings and
Cases in Corporate Morality, New York: McGraw Hill, p. 146.
54
Freeman, Edward (1984), Strategic Management: A Stakeholder Approach, Englewood Cliffs,
New Jersey: Prentice Hall Press.
55
Hasnas, John (1998), The Normative Theories of Business Ethics: A Guide for the Perplexed,
Business Ethics Quarterly, 1, p. 26.
24
corporation. The more widely the model has been introduced, the broader the claims
of rather arbitrary constituencies to be included as a stakeholder. It is indeed rather
arbitrary whether groups like competitors, the media, future generations, animals and
other living organisms can be regarded as stakeholders.
The inability of the stakeholder model to provide measurable standards for assigning
relative weights to the interests of the various constituencies is a serious shortcoming.
Stakeholders have not the same weight to business owners as citizens have to
governments. According to University of San Diego Professor Robert Phillips, it is
difficult to assign stakeholder status: Must managers consider the wellbeing of
competing organizations in decision making? In general, the answer is no. Phillips
refers to John Stuart Mill to make his point: Society admits no right, either legal or
moral, in the disappointed competitors, to immunity from this kind of suffering; and
feels called on to interfere, only when means of success have been employed which it
is contrary to the general interests to permit namely, fraud, treachery, and force.56
Phillips defends a fairnessbased stakeholder model, which suggests a
reconceptualization of many business interactions from that of cutthroat competition
even with those on whom the corporation depends in various ways to that of a
cooperative scheme.57 It has moreover been argued that the stakeholder model
subverts complex property and contractual relationships. According to Elaine
Sternberg of the London School of Economics, the stakeholder model here is popular
but pernicious mischaracterization of business and based on confusion about the
nature of accountability.58 For example, business cannot be held strictly accountable
to competitors and media coverage. A corporation must take such constituencies into
account, but cannot be held accountable. Sternberg correctly highlights that the
essence of contractual relationship is missing in the stakeholder approach.
Along the same lines, University of Michigans Kenneth Goodpaster argues that the
duty to stockholders is more general and proactive than what other constituencies can
claim. Moreover, the legal asymmetry between stockholders and stakeholders leads to
a potential conflict of interest, where corporate management in most circumstances
will find themselves having to make a choice between fulfilling a fiduciary duty and
serving stakeholder interests. Goodpaster calls such phenomenon the stakeholder
paradox: It seems essential, yet, in some ways illegitimate, to orient corporate
decisions by ethical values that go beyond strategic stockholder considerations to a
concern for stakeholders generally.59
Although it is primarily a legal term, Goodpaster uses fiduciary duty to describe the
purely ethical duty of a person in a position of trust. It seems that Goodpaster
considers a corporations ethical orientations as illegitimate as they represent a
betrayal of trust. Cambridges John Hendry argues that stakeholder theory failed to
explore the space that exists between impossible idealism and mundane realism.
This means that it runs the risk of presenting a weakened challenge to the primacy of
56
Stuart Mill, John (1859), On Liberty, Cambridge: Cambridge University Press (1989 edition), p.
77.
57
Phillips, Robert (1997), Stakeholder Theory and a Principle of Fairness, Business Ethics Quarterly,
1, pp. 6364.
58
Sternberg, Elaine (2000), Just Business. Business Ethics in Action, Oxford University Press, p. 49.
59
Goodpaster, Kenneth (1991), Business Ethics and Stakeholder Analysis, Business Ethics
Quarterly, 1, p. 63 and p. 69.
25
stockholder interests and an inadequate basis for policy discussions. As a possible

wayout, he defends on the one hand a pragmatic examination of the potential for
institutional reform, and on the other hand a differentiation and mundane empirical
understanding of different stakeholder interests on the other.60
The dominant view is also increasingly being questioned by a wide variety of other
academic disciplines. New insights question conventional wisdom that humans act
rationally, behave consistently, react predictably and selfish. Physics is no longer the
main supplier of ideas and explanations for the discipline of economics. The
importance of behavioral psychology for explaining economics was highlighted with
the Nobel Prize for Economics in 2002, jointly awarded to Princeton psychologist
Daniel Kahneman and Vernon Smith. Kahnemans work has made decisive
contributions in the field of behavioral economics, a field that challenges the
neoclassical assumption that economics agents (both individuals and institutions) are
driven by rational choices. Since 2002, cognitive psychology has become a legitimate
discipline to analyze economic motivation. It has increasingly invaded the business
ethics debate as well.
According to Eric Beinhocker, modern economic behavior should be explained as an

evolutionary process. Economics has become so complex that only the laws of
biology can explain how humans survive in a fastchanging, dynamic and complex
environment. According to Beinhocker, economy is a complex adaptive system,
which works under the same logic as biological evolution. The biological laws of
differentiation, selection and amplification are crucial to understand economic
behavior nowadays.61 Criticism has also been voiced in the area of political sciences.
German philosopher Jrgen Habermas, for example, has argued that the dynamics of
economic globalization and free markets are clearly out the control of consensual
rational judgments. Habermas warns that citizens are increasingly becoming
depoliticized.62
In addition to these serious questionings from the fields of psychology, biology and
political sciences, there has also been growing criticism from inside Wall Street.
Corporate scandals, including the high profile bankruptcies of Enron, WorldCom and
Parmalat, have questioned the desirability of a freemarket system. Only days before
collapsing, Enron exerted an almost mythical fascination to stock traders and financial
commentators. The hype around its skyrising stock price in the late 1990s made
Enron an irresistible phenomenon. The spectacular collapse of Enron, the subprime
mess and the rapidly heightening concerns about global warming have done more to
business ethics than wellintentioned corporate governance structures ever could have
imagined. In the European Union, corporate misconduct is making a decisive impact
on new legislation and initiatives to make business sustainable, just and equitable. In
the United States, public opinion is increasingly becoming the main driver of
litigation.
60
Collier, Jane & John Roberts (2001), An Ethic for Corporate Governance? Business Ethics
61
Beinhocker, Eric (2006), The Origin of Wealth: Evolution, Complexity and the Radical Remaking of
Economics, London: Random House.
62
Habermas, Jrgen (2002), Religion and Rationality: Essays on Reason, God and Modernity,
Cambridge, Massachusetts: MIT Press.
26
Even Wall Street guru Bill Gross, who manages the worlds largest bond fund out of
Californias Newport Beach argues that asset prices are no longer entirely a function
of the real economy: it can be just the reverse. He argues as follows: The real
economy is being driven by asset prices, which in turn are influenced by financial
flows of nonhistoric, composition, and uncertain longevity.63 By squeezing into one
single number matters that are rather too complicated to be fully understood, no
progress is achieved and alienation is often the result.
Louvains outspoken Economics Professor Paul de Grauwe warns for another related
problem: Asset bubbles create optimism and euphoria, stimulating economic
activity. The crashes that follow can lead to pessimism and downturns in economic
activity.64 Crashes are especially painful for emerging markets. Econometric
modeling might satisfy our psychological desire, but it is unable to thoroughly
understand complex realities. Columbia University Professor Edmund Phelps, who
was awarded the Nobel Prize for Economics in 2006, rejects orthodox neoclassical
economics for similar reasons. According to Phelps, the distinctive character of the
modern economy is revealed by its endemic uncertainty, ambiguity, diversity of
belief, specialization of knowledge and problem solving. This is especially urgent for
underdeveloped countries, which face destructive economic imbalances, misuse of
political power and suppression of liberties, not only because of deliberate efforts of
its leaders, but often also due to erroneous judgments and false glorification of the
positive scientific character of economics.
2.2. Thomas Donaldsons Integrative Social Contract
Due to various deficiencies of the stockholder, shareholder and corporate governance

models, there has been a renewed interest in the social contract models. The
reemergence of the social contract model is mostly visible in continental Europe,
where social welfare legislation has been more pronounced than in the AngloSaxon
countries. Before highlighting the two most widely praised contemporary social
contract models of John Rawls and Thomas Donaldson, this study will provide a
quick historical overview of the rather rich tradition of contract theory.
The first hints at social contract reasoning are to be found in Book 2 of Platos
dialogue The Republic. Hugo Grotius (15831645) defined social contract in the light
of natural law theory. Hobbes (15881679) presented his social contract theories in
Leviathan in 1651.65 The ethical foundation of Hobbess theory is the view that all
humans are psychologically driven by selfish interests. According to Hobbes,
63
Gross, William H. (2007), 100 Bottles of Beer on the Wall, PIMCO Investment Outlook, February.
64
De Grauwe, Paul (2007), The Eurozone Is Missing the Point in Its Quest for Stability, Financial
Times, July 11.
65
The title of the book comes from the Bible, the book of Job. In the chapters 40 and 41, God is
speaking to Job, who has been questioning Gods justice. The background of Hobbess magnum opus is
the English civil war. Whereas most British theologians argued that the State should not control the
church, Hobbes stressed that the State indeed should control the church. Due to these controversial
opinions, Hobbes went into exile in France in 1640. In France, he defended the idea that the Sovereign
has the right to establish reformed Christianity, the right to determine its doctrines, and the right to say
which are the books of the Bible and how they are to be interpreted.
27
individuals are better off living in a world with moral rules than one without moral
rules for purely egoistic reasons. Selfishness alone leads to the adoption of a basic set
of rules which will allow individuals to live in a civilized community. John Locke
(16321704) developed the idea that individuals have a natural right to freedom and
to private property. His reasoning starts with the socalled state of nature, an
imaginary circumstance in which there is no government. Under such conditions,
individuals would be the political equal of all others.66
Unlike Hobbes, the SwissFrench philosopher JeanJacques Rousseau (17171778)

argued that the state of nature is not a state of war, but a state of individual freedom
where creativity flourishes. In his widely read The Social Contract of Principles of
Political Right, published in 1762, he argues that a social contract is established to
regulate social interaction in civil society. By entering into a social contract, people
place restraints on their behavior, which in return enables a process of community
building. In Rousseaus viewpoints, rationality and morality are only possible within
civil society if people agree to a social contract. Rousseau moreover holds that a
social contract between citizens establishes an absolute democracy, which is ruled by
the general will, or what is best for all people. This communitarian perspective finds
its clearest expression in the general and abstract laws of the state.
A major breakthrough in the business ethics debate was provided by the American
philosopher John Rawls (19212002). His book A Theory of Justice (1971) presents
a conception of justice which generalizes and carries to a higher level of abstraction
than the familiar theory of the social contract as found, say, in Locke, Rousseau, and
Kant.67 His social contract theory is not directed at a particular government or
society. Instead, the guiding idea is that the principle of justice for the basic structure
of society should be the object of an original agreement. The socalled principles of
justice are determined by the choices which rational egoists would make in a
hypothetical situation of equal justice.
Rawls uses a constructivist technique comparable to the one Kant used in the
formulation of the categorical imperative for his moral philosophy. The method is
called veil of ignorance, a concept that enables us to perceive a just state. This
original position is devised behind a veil of ignorance, so that rational men would not
know who they were, where they are, in which culture they live or even what
generation they belong to. By conceiving of ourselves as potential constructors of an
imaginary just future society, but being ignorant of our ethnic and socioeconomic
background within that society, Rawls strips away all those elements of information
which he deems irrelevant to key questions concerning justice. Rawls moreover
defends the employment of a veil of ignorance to ensure impartiality.
According to Rawls, the two basic principles of justice that a rational person would
choose in the original position are (1) each person is to have an equal right to the
most extensive basic liberty comparable with a similar liberty for others; (2) social
and economic inequalities are to be arranged so that they are both (a) reasonably
66
Locke, John (1963), Two Treatises of Government, New York: Cambridge University Press, pp.
309311.
67
Rawls, John (1971), A Theory of Justice, Cambridge, Massachusetts: Harvard University Press, p.
11.
28
expected to be to everyones advantage, and (b) attached to positions and offices open
to all. The first principle is related to basic liberties of citizens such as political liberty
(the right to vote and to be eligible for public office); freedom of speech and
assembly; liberty of conscience and freedom of thought; freedom of the person along
with the right to hold personal property; and freedom from arbitrary arrest and seizure
as defined by the concept of the rule of law. The second principle applies to the
distribution of income and wealth and to the design of organizations that make use of
differences in authority and responsibility, or chains of command. Concerning
equality of opportunity, Rawls envisions only one way to prevent the stronger or
richer in his just state from overpowering the weaker or poorer by enforcing the
maxim no redistribution of resources within such a state can occur unless it benefits
the least welloff. Rawls stresses that these principles are to be arranged in a serial
order with the first principle prior to the second. In his quest for distributive justice,
Rawls finally argues that all social values liberty and opportunity, income and
wealth, and the bases of selfrespect are to be distributed equally unless an unequal
distribution of any, or all, of these values is to everyones advantage.68
Rawls admits that thus far the whole concept of justice is rather abstract and therefore
requires interpretation. In an attempt to bring it down to practical arrangements,
Rawls justifies that it is possible for men to give up some fundamental liberties in
return for social and economic gains. In this sense, he launches the principle of
redress, which holds that in order to treat all persons equally, to provide genuine
equality of opportunity, society must give more attention to those with fewer native
assets and to those born into the less favorable social positions. He also introduced the
difference principle which holds that social and economic inequalities are just only if
they are to the greatest benefit of the least advantaged and open to all under
conditions of equality of opportunity.
Rawls egalitarian principles have not been immune to criticism. In social contract
theories, morality is based exclusively on uniform social agreements that supposedly
serve the best interests of those who make the agreement. But who should be in
charge of making those decisions? A contractarian approach is questionable as it
includes morally arbitrary choices. From the right, Rawls principles have been
criticized as unsympathetic to talent, superior achievement, individual excellence or
entrepreneurship do not bring the best out of a society. In the context of business or
economics, performance will be meager. Recognizing this criticism, Rawls argues
that talented people do not deserve moral credit and social rewards for developing
their talents and for using them for societys benefit. As a compromise, Rawls wants
to redirect societys educational resources from students of high capability to those of
lower capacity.69 From the left, Rawls has been criticized for his general conception
of justice, which is based on the trickledown effect. Critics claim that there is nothing
just about his theories as it is a familiar approach to legitimizing injustice. Rawlss
hypothetical definition of justice implies a justification of present socioeconomic
inequalities by claiming that things will improve in the long run.70
68
Idem, pp. 6063.
69
Idem, pp. 100101.
70
Bowie, Norman (2002), The Blackwell Guide to Business Ethics, Malden, Massachusetts:
Blackwell, 2002, p. 1.
29
Wharton Professor Thomas Donaldson integrated the all above mentioned contract
theories into a modern normative business ethics model. He describes a contract as
between productive organizations and individual members of society, not between
productive organizations and some supraindividual, social entity.71 In Donaldsons
interpretation, a contract is a form of moral legitimation of corporations understood as
productive organizations. His main goal is not to legitimize or delegitimize an
existing order but to merge philosophical concepts and practical realities for people
facing the ethical challenges posed by business. His model is integrative as it tries to
combine the hypothetical or macro contract, reflecting a hypothetical agreement
among rational members of a community on one side, and the extant or micro
contract, which reflects an actual agreement within a community, on the other side.
According to Donaldson, an implied social contract is based on three principles: A

productive organization should enhance the longterm welfare of employees and
consumers in any society in which the organization operates; a productive
organization should minimize the drawbacks associated with moving beyond the state
of nature to a state containing productive organizations; a productive organization
should refrain from violating minimum standards of justice and of human rights in
any society in which it operates.72 Local economic communities may specify ethical
norms for their members through microsocial contracts within a socalled moral free
space. Mangers, moreover, should act consistently with hypernorms, which he defines
as principles so fundamental to human existence that they serve as a guide in
evaluating lower level moral norms.73 The process of identifying hypernorms is
considered to be indispensable to examine corporate involvement. In practice,
principles falling under efficiency hypernorms include respect for intellectual
property; engaging in fair competition and avoiding monopolies; avoiding nepotism
and crony capitalism; not abusing government relationships; avoiding bribery and
respecting environmental integrity.74
In sum, Donaldson proposes two levels of social contract: a macrosocial contract

that serves as the set of principles or hypernorms that contractors would agree upon to
ensure procedural fairness, and microsocial myriad extant contracts that are
concerned with how communities actually govern themselves within their moral free
space. The main strength of this framework is its simultaneous prescriptive and
descriptive nature. Donaldsons method implies that the moral foundations of
productive organizations can be understood through a thought experiment in which
the terms of a hypothetical contract are delineated. The intellectual presumption of his
social contract model is that all productive organizations, including corporations, are
artifacts; that they are in part the products of our moral and legal imagination, and as
such, they are to be molded in the image of our collective rights and societal
71
Donaldson, Thomas (1982), Corporations and Morality, Englewood Cliffs, New Jersey: Prentice
Hall Press, 1982, p. 42.
72
Press, p. 54.
73
Donaldson, Thomas & Thomas W. Dunfee (1994), Towards a Unified Conception of Business
Ethics: Integrative Social Contacts Theory, Academy of Management Review, April, p. 252.
74
Donaldson, Thomas (2002), DeCompacting the Global Compact, Academy of Management
Conference, Denver, August 12.
30
ambitions. Donaldson makes a further distinction in the legal perspective, suggesting

a tentative list of ten fundamental rights which every actor in the international arena,
including nation states and multinational corporations, must respect. These ten rights
include freedom of physical movement; ownership of property; freedom from torture;
fair trial; nondiscriminatory treatment; physical security; freedom of speech and
association; minimal education; political participation and subsistence.75
Although Donaldson is the first to admit that this minimal set is not conclusive or
complete, one can immediately raise serious questions about how complex concepts,
such as ownership, education, and participation have to be interpreted in different
cultural settings. According to Donaldson, these rights have to be interpreted
according to an algorithm that is based on the home countrys culture.76 Nation states
are required to proactively aid the poorest, whereas multinational corporations possess
this duty as a maximal not minimal moral requirement.
The theoretical foundation of the Donaldson integrative social contract model has
been criticized by several business ethicists. There is the core question of whether the
assumptions of a macrosocial contract are consistent with social beliefs and practices
in other cultural settings or in a context of socioeconomic underdevelopment.
Hypernorms are idealistic and vague. A moral free space, or a microcontractors
hypernorm, is supposedly discretionary and limited at the same time, but who will
draw the line? By sanctioning moral free space for economic communities,
Donaldsons model can be accused of ethical relativism. When an individual or
corporation leaves his hometurf, moral clarity often blurs. As philosopher Michael
Walzer has noted, there is no Esperanto of global ethics.77
According to Robert Phillips, the hypothetical character of Donaldsons social

contract model makes it tenuous.78 He argues that if most contracts are unwritten,
then finding consent is rather a tricky endeavor. Along the same lines, Van Buren
argues that trying to measure a favorable attitude (tacit consent) in fact indicates no
consent at all exists.79 Hasnas also rejects the hypothetical character of the contract
model as he sees no reason to accept the premise that justice should be based on
hypothetical rather than real consent as expressed in actual business contracts and
structures.80 Donaldson counterbalances these objections by claiming that the social
contract is explicitly fictional or hypothetical: If the contract were something other
75
Thomas Donaldson, The Ethics of International Business, New York: Oxford University Press,
1989, p. 66.
76
Press, p. 102.
77
Donaldson, Thomas (1996), Values in Tension: Ethics Away from Home, Harvard Business
Review, September/October, p. 48.
78
Phillips, Robert (1997), Stakeholder Theory and a Principle of Fairness, Business Ethics Quarterly,
1, p. 52. Phillips argues that acts that imply consent, on the other hand, are actually no consent at all.
Rather, they may be either acts that demonstrate a favorable attitude toward the prospect in question or
acts that induce obligations similar to or identical to those induced by genuine express consent. (p.
60).
79
Van Buren, Harry (2001), If Fairness Is The Problem, Is Consent The Solution? Integrating ISCT
and Stakeholder Theory, Business Ethics Quarterly, 3, p. 490. This paper won the 1999 Best Paper
Award from the Academy of Managements Social Issues in Management.
80
Hasnas, John (1998), The Normative Theories of Business Ethics: A Guide for the Perplexed,
31
than a fiction, it would be inadequate for the purpose at hand: namely revealing the
moral foundations of productive organization.81 In other words, the moral strength of
the social contract is not derived from the consent of the parties involved as if they
had struck a deal. Velasquez questions Donaldsons assumption that all cultures must
accept the body of absolutist hypernorms as binding through a universal social
contract, whereas the less fundamental local norms are those that derive from local
and regional social contracts. According to Velasquez, this model does not enable us
to know what the aggregated preferences of everyone in the world would be nor is
it possible to know if there is a unique solution to the problem of aggregating their
preferences.82 Velasquez questions the existence of metaphysical assumptions,
inevitably culturally biased, about the nature of the contractors in Donaldsons
model.
In addition, Velasquez argues that Donaldsons contract model is too narrowly based
on an ideal egalitarian Western society which does not take into account the intrinsic
problems of a more hierarchic model of society, which is often the case in developing
countries. Velasquez also criticizes the fact that Donaldsons theories are too narrowly
rightsbased, which are typical for an individualistic Western culture instead of the
pursuit of collectivist goals. According to Velasquez, these are clearly parochial
assumptions. Velasquez questions the hierarchy or the prioritization of rules. He
argues that the mere fact that a set of norms is prevalent in a region does not
constitute a justification of those norms, and so it is arbitrary to say (on that basis
alone) that those norms should be followed by anyone. Velasquez asserts that none
of the local norms prevalent in any region of the world has been arrived at through the
kind of bargaining process proposed by social contract theories.83 In practical terms,
this means that the social contract theory leaves corporate managers too much to their
own arbitrary devices. As an alternative, Velasquez suggests the definition of a
standard account of moral reasoning. Under the standard account, moral reasoning
proceeds by subsuming particular cases under general rules. In his model, moral
reasoning is hierarchical with specific moral judgments at the bottom of the hierarchy
and general abstract moral principles such as Kants categorical imperative, Mills
principle of utility or Rawlss difference principle at the top of hierarchy. The
problem with such a model is that it remains unclear how many principles and
which principles in particular are at the top of the hierarchy.84
In sum, the most fundamental objection to Donaldsons contract model resides in its
voluntary nature. Psychologically, people might be interested in following the rules;
opportunism however seems too closely related to human nature. Business managers
operating in a context of underdevelopment, where legal frameworks and law
enforcement are weak or nonexistent might not be ethically bound to keep a close eye
on the social contract. It is also argued that disproportionate expectations from
business and society can undermine a corporations competitiveness and efficiency.
81
Press, p. 56.
82
Velasquez, Manuel (2000), Globalization and the Failure of Ethics, Business Ethics Quarterly, 1,
p. 349.
83
Idem, p. 350.
84
Velasquez, Manuel (2002), Moral Reasoning; in: Norman E. Bowie, The Blackwell Guide to
Business Ethics, Malden, Massachusetts: Blackwell, pp. 102116.
32
2.3. Michael Porters Strategic Corporate Social Responsibility
The most popular contemporary business ethics model at the present moment is
elaborated by Michael Porter. The Harvard Business School professor has been the
most influential scholar in the field of strategic management over the last 25 years and
is increasing influential in the business ethics debate. Porter has moved from
elaborating on Milton Friedmans ideas regarding philanthropy in the early 1980s, to
proposing a socalled strategic philanthropy model at the turn of the millennium, to
nowadays endorsing a contextfocused strategic CSR model. This study will highlight
the rationale behind these frameworks.85
In the American context, philanthropy has been popular ever since its blueprint was
written by steel tycoon Andrew Carnegie (1835-1919). In an essay published in 1889,
he famously argued that the man who dies rich dies disgraced.86 He wanted to make
the point that the wealthy have a duty to devote their fortunes to poor in order to avoid
growing inequality. For Carnegie, growing inequality was the inescapable price of the
wealthcreation that made social progress possible. Inspired by Carnegies words,
thousands of hospitals, libraries, universities and welfare services in the United States
are funded by private donations. This stands in sharp contrast with more government
funded policies in Western Europe.87 Is it also worth highlighting that religiosity is
one of the strongest predictors of propensity to make philanthropic contributions.
Religiosity is equally an important explanation of why Americans make more
philanthropic contributions than Europeans.
The fact that multibillionaire Warren Buffett pledged $31 billion to the Bill &
Melina Gates Foundation in late 2006 is a reminder that the philanthropic sector
remains popular and influential in the United States. However, it should also be noted
that the growing trend of multibillion contributions increasingly blurs the line that
separates the private and the public sector. Critics also argue that Buffetts donation
generates unease about lack of accountability. Michael Porter argues that the way
most corporate philanthropy is practiced today is diffuse and unfocused. Following
Friedmans rationale, Porter argues that most corporate philanthropy consist of
numerous small cash donations given to aid local civic causes or provide general
operating support to universities and national charities in the hope of generating
goodwill among employees, customers, and the local community. Rather than being
tied to well thoughtout social or business objectives, the contributions often reflect
the personal beliefs and values of executives or employees. In addition, Porter argues
that one of the most popular approaches employee matching grants explicitly
leaves the choice of charity to the individual worker. Although aimed at enhancing
morale, the same effect might be gained from an equal increase in wages that
employees could then choose to donate to charity on a taxdeductible basis. It does
indeed seem that many of the giving decisions companies make today would be better
85
Porter, Michael (1980), Competitive Strategy, New York: Free Press.
86
Carnegie, Andrew (1889), Wealth, North American Review, June, p. 653.
87
Only in the United States, corporate charitable expenditures on causerelated marketing jumped from
$125 million in 1990 to an estimated $828 million in 2002. Arts sponsorships accounted for an extra
$589 million in 2001. USbased foundations hold over $330 billion in assets and contribute over $20
billion annually to educational, humanitarian, and cultural organizations of all kinds. Foundations are
strongly favored through existing tax rules and regulations.
33
made by individuals donating their own money.88 Porter, however, does not blindly
follow Friedmans arguments. Friedmans two implicit assumption that social and
economic objectives are separate and distinct, so that a corporations social spending
comes at the expense of its economic results, and that corporations, when they address
social objectives, provide no greater benefit than is provided by individual donors
only hold true when corporate contributions are unfocused and piecemeal, as is
typically the case today.
Around the turn of the millennium, Porter decisively moved beyond Friedmans
model by convincingly defending a more strategic interpretation of philanthropy:
Corporations can use their charitable efforts to improve their competitive context
the quality of the business environment in the location or locations where they
operate. Using philanthropy to enhance context brings social and economic goals into
alignment and improves a corporations longterm business prospects thus
contradicting Friedmans first assumption. In addition, addressing context enables a
corporation not only to give money but also to leverage its capabilities and
relationships in support of charitable causes. That produces social benefits far
exceeding those provided by individual donors, foundations, or even governments.
Contextfocused giving thus contradicts Friedmans second assumption as well.89
According to Porter, current programs will likely fall into three categories: (1)
communal obligation: support of civic, welfare, and educational organizations,
motivated by the companys desire to be a good citizen; (2) goodwill building:
contributions to support causes favored by employees, customers, or community
leaders, often necessitated by the quid pro quo of business and the desire to improve
the companys relationships; and (3) strategic giving: philanthropy focused on
enhancing competitive context, as outlined here.90 Porter concludes that the more
closely a corporations philanthropy is linked to its competitive context, the greater
the corporations contribution to society will be. However, where a firm neither adds
value nor derives benefits, then philanthropic commitment should be left as
Friedman already asserted to individual taste.91
Michael Porter argues that a corporation can considerably contribute to societys

welfare by focusing on contextfocused strategic philanthropy. In order to be
strategic, a corporation has to overcome conventional forms of philanthropy or
charity, which are often diffuse and unfocused. Conventional forms of philanthropy
continue to be widespread for several reasons. Most importantly, traditional forms of
philanthropy are strongly favored through tax rules and regulations. This is especially
true in the United States where corporate charitable expenditures on causerelated
marketing jumped from $125 million in 1990 to an estimated $828 million in 2002.
Arts sponsorships, for example, accounted for an extra $589 million in 2001. US
based foundations hold over $330 billion in assets and contribute over $20 billion
annually to educational, humanitarian, and cultural organizations of all kinds.
88
Porter, Michael & Mark Kramer (2002), The Competitive Advantage of Corporate Philanthropy,
Harvard Business Review, 12, p. 63.
89
Idem, pp. 67.
90
Idem, p. 15.
91
Barney, Jay (2002), Strategic Management: From Informed Conversation to Academic Discipline,
Academy of Management Executive, 2, pp. 5365.
34
Conventional philanthropy is characterized by institutions such as the Ford and

Rockefeller Foundations. The green revolution, for example, had its roots in a joint
research of these foundations. Their programs developed new strains of wheat and
rice that doubled and tripled crop output per acre. Within six years, India doubled its
rice production, and Mexico, once an importer of wheat, became an exporter. The
Carnegie Foundation has had a similar decisive impact on medical education in the
United States.92 Traditional forms of philanthropy enjoy popularity in corporate
boardrooms as relatively small amount of cash donations given to local civic causes
can generate a tremendous amount of goodwill, strengthen a corporations reputation,
and increase employee loyalty. Philanthropy enhances corporate morale.
Due to its popularity and widespread acceptance, Michael Porter argues that the
corporations should use philanthropy to improve their competitive context the
quality of the business environment in the location or locations where they operate
According to Porter, using philanthropy to enhance context brings social and
economic goals into alignment and improves a companys longterm business
prospects. Moreover, addressing context enables a company not only to give money
but also to leverage its capabilities and relationships in support of charitable causes.
That produces social benefits far exceeding those provided by individual donors,
foundations, or even governments.93 According to Porter, Cisco is a good example of
a corporation, which has begun to use contextfocused philanthropy to achieve both
social and economic gains. Its ambitious educational program the Cisco
Networking Academy trains computer network administrators, and thus indirectly
alleviates potential constraints on its growth in the future. Apple Computer, for
example, has a long tradition of donating computers to schools. Such strategic
philanthropic activity is a means to introduce its products to young people while
expanding its potential market. In rethinking where to focus their philanthropy and
how to give, a corporation can combine its economic and social objectives in a
competitive and strategic way. Eventually, the social and economic goals are no
longer inherently conflicting but integrally connected.94 Porter concludes that the
more closely a corporations philanthropy is linked to its competitive context, the
greater the corporations contribution to society will be. However, where a firm
neither adds value nor derives benefits, then philanthropic commitment should be left
as Milton Friedman already correctly asserted to individual taste.95
More recently, Porter has highlighted the strategic link between competitive
advantage and corporate social responsibility. According to Porter, such approach is
warranted as most CSR efforts are counterproductive: First, they pit business against
society, when in reality the two are interdependent. Second, they pressure companies
to think of corporate social responsibility in generic ways instead of in the way most
appropriate to each firms strategy. The fact is, the prevailing approaches to CSR are
so disconnected from strategy as to obscure many great opportunities for companies
92
Porter, Michael & Mark Kramer (1999), Philanthropys New Agenda: Creating Value, Harvard
Business Review, 12, pp. 121130.
93
Porter, Michael & Mark Kramer (2002), The Competitive Advantage of Corporate Philanthropy,
Harvard Business Review, December, pp. 67.
94
Idem, p. 15.
95
Barney, Jay (2002), Strategic Management: From Informed Conversation To Academic Discipline,
Academy of Management Executive, 2.
35
to benefit society.96 In order to overcome these weaknesses, Porter proposes a

fundamentally new way to look at the relationship between business and society that
does not treat corporate growth and social welfare as a zerosum game. Corporations
should instead identify the social consequences of their actions, discover opportunities
to benefit society and themselves by strengthening the competitive context in which
they operate, determine which CSR initiatives they should address and find the most
effective ways of doing so.
The interdependence between business and society takes two forms in Porters model.
On the one hand, there are the socalled insideout linkages, in which corporate
operations are directly having an impact on society. On the other hand, there are
outsidein linkages, in which external societal forces are having an impact on
corporations. The model furthermore categorizes three general ways in which
corporations should intersect with society. First, Porter distinguishes generic social
issues, which are related to corporate operations that are not significantly having an
impact on society. In other words, issues which are not material to the corporations
longterm competitiveness.
In the second place, value chain social impacts, which refer to normal corporate
operations significantly impacting the wider society. In the third place, social
dimensions of competitive context, where social issues affect the underlying drivers of
corporate competitiveness. In addition, Porter divides these three categories into two
primary modes: responsive CSR should address generic social impacts through good
corporate citizenship and value chain social impacts by mitigating harm from negative
corporate impacts on society. The second mode is strategic CSR, which enables value
chain social impact to be transformed into activities that benefit society. Porter also
argues that strategic CSR is capable of advances strategic philanthropy, which in
return can potentially leverage areas of competitiveness.
Semiconductor giant Intel is an example where strategic CSR is boosting its

competitive advantage, especially in the area of manufacturing processes, supplier
chains, employee relations, and intellectual capital. The corporation has launched a
system of assessments and audits that yields hard data regarding the social and
environmental performance of its suppliers, enabling the suppliers to become part of
its own socalled continuous improvement process. According to Julie Gorte,
Calverts director of social research, Intel beats its peers on environmental impact,
achieving substantially betterthanaverage reductions in emissions, recycling
recovery ratios, compliance, and reduction of production waste. 97 Intels willingness
to be transparent and proactive on business ethics issues has raised its visibility and
reputation. Consequences for a firms reputation are obviously crucial as they might
significantly impact the firms cost of capital, and its ability to sell products.
96
Porter, Michael & Mark Kramer (2006), Strategy and Society: The Link between Competitive
Advantage and Corporate Social Responsibility, Harvard Business Review, 12, pp. 7892. The 2006
McKinsey Award was granted to this article.
97
Wheat, Doug (2002), Social Investors Spur Social and Environmental Upgrades at Intel, Social
Funds, December 17.
36
2.4. Roger Martins Virtue Matrix
A third model, equally popular in North American academic circles, is the socalled
virtue matrix.98 The model was established by Roger Martin, the Dean of the Rotman
School of Management at the University of Toronto, and invented to replace the
outdated shareholder model. The matrix is a conceptual tool based on Aristotelian
virtue ethics and distinguishes between two sets of corporate responsibilities. The first
one is termed instrumental, explicitly geared towards shareholder value enhancement.
Examples are norms and conventions, which have been incorporated by legal
regulations. The other set is termed intrinsic, which activities are neither immediately
visible, nor explicitly geared toward shareholder value.
Martins virtue matrix furthermore consists of four quadrants. The bottom two form
the foundation or civil foundation, whereas the top two form the frontier. The left
civil foundation quadrant is an accumulation of customs, norms, laws, and
regulations, which promote socially responsible activities and enhance shareholder
value. The bottom right quadrant represents compliance, containing conduct required
by law or regulation. The line between the quadrants is not fixed. Some activities
move back and forth between the bottom two quadrants as certain societal behavioral
patterns change throughout time and space. Certain labor rights, for example, were
part of the bottom left quadrant in the past, but have now moved up to opposite side.
The bottom quadrants are deep and robust in developed countries, and shallow and
fragile in developing countries.
The top two quadrants of the matrix are called the strategic and structural frontiers.
Activities in these quadrants are mostly intrinsically motivated. The upper left
strategic frontier eventually might result in additional shareholder value. According to
Martin, socially responsible corporate practices in the strategic frontier tend to
migrate to the civil foundation as other companies imitate the innovator until the
practice becomes the norm. Pharmaceutical corporations providing cheap medicine
pro bono for tropical diseases, but not justified from a viewpoint of financial returns,
are an example. The upper right quadrant is the socalled structural frontier,
consisting of activities that are intrinsically motivated but contrary to the interests of
shareholders. Not shareholders but society is the main beneficiary of corporations
pushing the structural frontier. Examples are corporations refusing to pay bribes to
win overseas contracts. At first sight, shareholders seem to lose out, whereas society
stands to gain. In the long term, however, both shareholder and stakeholders are
reaping the benefits. Martins ultimate goal is to show where corporations stand in the
matrix. For a corporation to earn public credit, it has to focus on activities that reside
in the upper quadrants. This becomes especially clear in the case of pharmaceutical
98
It is also worth highlighting the work of ethicist Robert C. Solomon, who worked along the same
lines. The Princeton Professor, who died in January 2007, established a remarkable set of workable but
morally complex managerial virtues for managers, including courage, fairness, sensitivity, persistence,
honesty, and gracefulness. He applied these virtues in the context of corporate downsizing and contract
negotiations. He argued that virtuous toughness is neither completely selfinterested nor purely
altruistic. Instead, it involves both a willingness to do what is necessary and an insistence on
doing it as humanely as possible. See: Solomon, Robert (1992), Ethics and Excellence: Cooperation
and Integrity in Business, New York: Oxford University Press.
37
corporations, which so far have been unable to eradicate tropical diseases such as
malaria, dengue fever and tuberculosis due to a lack of strategic funding.
The virtue matrix makes clear that the depths of the civil foundation or bottom two
quadrants are crucial in the global business ethics equation. Martin argues that global
corporations have an essential role to play especially in the lowincome countries, as
they can induce employment and raise environmental standards. Martin argues that
globalization can average up the worlds civil foundations. At the same time,
Martin warns that corporations should not engage in averaging down business
practices. Notorious examples are corporations using underdeveloped regulatory
environments in lowincome countries to dump waste or to abuse cheap labor. Such
corporate practices should be condemned as inconsistent with the home countries
civil foundation. Martins virtue matrix is interesting tool to frame the business ethics
debate. At the practical level, it can help corporations to visualize business dilemmas
and break barriers to increase the supply of corporate virtue, which are indispensable
to average up the civil foundation. According to Martin, the ingredients needed to
innovate and consolidate the strategic frontier are courage to undertake bold
initiatives on the part of executives and peer encouragement. At the structural frontier,
legal and economic incentives are a sine qua non for the advancement of the civil
foundation.99
In order to assess the practical value of value matrix, Martin developed a set of
explicit design parameters that would produce if adhered to an effective model for
a chief executive officer to use to pursue exemplary corporate citizenship. Martin
deliberately focuses on the role of the CEO because in any corporation, the CEO must
ratify the major decision made in respect of corporate citizenship and hence must
have a decisionmaking model in his or her head that enables understanding and
evaluation of those decisions. Martin therefore argues that it is not unreasonable to
use the CEO as the ultimate focus of the evaluation of model effectiveness.
Martin distinguishes seven design parameters against which the effectiveness of CSR
models can be judged, three in the area of usability, one in desire and three with
respect to ability to produce beneficial results. The first design parameter with respect
to usability is to be connectable: a model must be connectable to other accepted
managerial tools and models. In the second place, it has to be concrete: a model
must be sufficiently concrete for a CEO to be able to translate its inferences into
action. In the third place, it has to be measurable: in order to be useful, a tool needs
to have the results that it produces be measurable. The single design parameter with
respect to CEO desirability is to be organic: a model must be linked to the true world
of the CEO as a human being, not a profitmaximizing automaton. Finally, there are
three design parameters related to the capacity of the model directed at assisting the
CEO producing beneficial action given that the CEO sees the model as usable and
desirable. In the first place, it has to be particular: a model must be able to provide
decisionmaking assistance to CEOs across a wide array of particular situations. In
the second place, it has to be evolutionary: standards for corporate citizenship have
not been and are unlikely to remain static over time. In the third place, it has to be
communicable: in order to be effective, the model must be understandable to the
99
Martin, Roger (2002), The Virtue Matrix. Calculating the Return on Corporate Responsibility,
Harvard Business Review, 3, pp. 511.
38
audiences involved. According to Martin, these seven design parameters can be used
to assess the effectiveness of CSR models from the point of view of the well
intentioned CEO.100
More recently, Martin has focused on an intriguing new model of social

entrepreneurship. According to Martin, social entrepreneurship is an appealing
construct precisely because it holds such high promise. However, he warns that the
concept is a mixed blessing: On the positive side, it connotes a special, innate ability
to sense and act on opportunity, combining outofthebox thinking with a unique
brand of determination to create or bring about something new to the world. On the
negative side, entrepreneurship is an ex post term, because entrepreneurial activities
require a passage of time before their true impact is evident.101 Martin here correctly
warns that the notion is still too closely linked to Schumpeters analysis, in which
entrepreneurial spirit is defined as creative destruction.102 In the conception of
Schumpeter, the role of an entrepreneur role has a paradoxical impact on society, both
disruptive and generative.
Martin equally wants to dispel the notion that the difference between an entrepreneur
and a social entrepreneur can be ascribed simply to motivation, as if the former is
driven by money and the latter by altruism. Such standoff is indeed misleading.
Martin defines a social entrepreneur as somebody who knows how to identify an
inherently unjust equilibrium that causes exclusion or suffering of a segment of
society and that is lacking the means to achieve any transformative benefit on its own.
In return, a social entrepreneur is convinced that there an opportunity exists in such
unjust equilibrium. In order to break down the status quo or hegemony, a social
entrepreneur has to forge a new, stable equilibrium that releases trapped potential or
alleviates suffering. Martin makes clear that social entrepreneurship is intrinsically
linked to and can be reformulated through social activism. According to Martin, who
was named one of Business Weeks seven Innovation Gurus in 2005, good examples
of successful social entrepreneurship include fairtrade product certification and
microcredit schemes. Martins virtue matrix and social entrepreneurship model are
valuable tools for management to transform corporate morale and mission, culture and
leadership. In being instrumental, normative, descriptive and managerial, the virtue
matrix has the promise the evaluate competing stakeholders claims, stimulate a much
needed debate and encourage corporate business leaders to be bold and innovative.
100
Martin, Roger (2005), Corporate Citizenship: Whats a CEO to Do? Draft paper for Aspen TIP
Conference, Monterrey, Mexico, January, pp. 46.
101
Martin, Roger & Sally Osberg (2007), Social Entrepreneurship: The Case for Definition, Stanford
Social Innovation Review, Spring, p. 30.
102
Schumpeter correctly observed in 1950 that capitalism is by nature a form or method of economic
change and not only never is but never can be stationary [] The fundamental impulse that sets and
keeps the capitalist engine in motion [] incessantly revolutionizes the economic structure from
within, incessantly destroying old one, incessantly creating a new one. See: Schumpeter, Joseph
(1950), Capitalism, Socialism and Democracy, New York: Harper, p. 82.
39
3. Preliminary Conclusion: Towards a Paradigmatic Shift
The dominant academic view, inspired on the writings of Smith, Hayek and
Friedman, convincingly points at the specific advantages of competitive free markets.
First, free markets encourage creativity and entrepreneurship. Second, free markets
foster efficiency and provide incentives for production at the lowest cost. A third
characteristic is that they require no central direction or organization. Free markets
require no governmental interventions in order to function. Free markets are
associated with freedom of choice and let individuals act in their own best interest.
These specific advantages have become overwhelmingly evident since the demise of
the totalitarian Soviet empire.
Despite these obvious, rigorous strengths of the competitive free markets model, there
are several limitations and caveats. First, it has become clear that the assumption that
business operates in a morally neutral arena is fallacious. Louvains leading moral
theologian and business ethicist Professor Johan Verstraeten argues that the
instrumental characteristics of a corporate manager are often grounded inextricably
in a mechanistic perception of reality typified by an anthropological reduction. He
refers to expressions such as reengineering the Corporation (the enterprise as
machine!), human resources (the human person as material reserve), workforce
(reduction of the human person to a source of energy) and the ubiquitous obsession
with control and evaluation.103 These expressions indeed confirm a mechanistic
perception of the human being, which is dangerous. Along the same lines, Alford and
Naughton convincingly argue that by elevating shareholder wealth to the status of
the ultimate good, the shareholder model in effect erects a tyranny of foundational
goods, inhibiting managers from considering more excellent goods except as
instruments to increase profits.104
In the same spirit, MacIntyre argues that there are strong grounds for rejecting the
claim that effectiveness is a morally neutral value. For MacIntyre, the concept of
effectiveness in the context of corporate business is inseparable from a mode of
human existence in which the contrivance of means is a central part of the
manipulation of human beings into compliant patterns of behavior. He correctly
concludes that only by appeal to his own effectiveness in this respect that the
manager claims authority within the manipulative mode.105 All these critiques point
at the fragile foundations of the dominant academic view.
It has become clear that corporations are not merely valuefree private institutions
making money, but social entities embedded in a larger society. Their dealings are
legitimized as it intends to contribute to the welfare and wellbeing of surrounding
communities which already existed prior to its arrival on the scene. Moreover,
corporations are not static entities, but rather dynamic bodies, which interacts
permanently and dialectically with the ecological and cultural environment. It is only
103
Verstraeten, John (2006), Leadership Beyond Management: Spirituality and the Courage to Be
Human, Louvain: Catholic University of Louvain.
104
Alford, Helen & Michael Naughton (2001), Managing As If Faith Mattered, Christian Principles
in the Modern Organization, Notre Dame, Indiana: University of Notre Dame Press, p. 47.
105
MacIntyre, Alasdair (1981), After Virtue, London: Duckworth, p. 2.
40
in the light of this dynamic relationship between the corporation and its physical and
cultural environment, that our ethical problems can be understood adequately.
The theoretical inconsistencies or practical weaknesses of the dominant academic

view are not an excuse for corporations to surrender to unreasonable expectations set
by society. Arbitrary expectations are mostly demands of antibusiness activist
groups, which are hostile to the freemarket economy. According to Henderson, the
effects of enforced stringency and uniformity are especially damaging in labor
markets. Regulations made in the name of social justice or positive human rights,
whether by governments or businesses, can undermine freedom of contract and thus
deprive people of opportunities. Those who suffer most from such actions are often
the worst off.106
INSEAD Professor Ethan Kapstein convincingly warns against the use of an ethics
of intimidation, especially in the context of the developing world. He argues that the
rules of engagement (laws) in the area of corporate ethics are often too weak to
protect the environment. According Kapstein, such weakness opens the door to
legitimate disputes over interpretation and enforcement. Moreover, when profound
differences arise over corporate social responsibility in such areas, the parties
involved should set out the advantages and disadvantages associated with adopting
higher standards before declaring any proposed policy solution to be the obvious best
choice. Kapstein argues that such practice is paramount to an ethics of
intimidation.107
Along the same lines, University of East Anglia Professor Timothy ORiordan argues
that sustainable development is deliberately vague and inherently selfcontradictory
so that endless streams of academics and diplomats could spend many comfortable
hours trying to define it without success. According to ORiordan, sustainability is
merely used as a mediating term to bridge the widening gulf between developers and
environmentalists.108 Mahathir, Lutzenberger, and Jhamtani warn that the fashionable
sustainable development bandwagon is a Western, if not white middleclass social
movement, with a main objective to prevent developing countries from doing what
those in the West have already done.109
There is moreover no consensus on how to achieve just business or how to frame

better the business ethics debate. On the one hand, freemarket ideologues warn that a
major undesirable consequence of attempts to moralize the corporation is the
disincentive to entrepreneurship. Whistle blowing can be prompted by a desire for
revenge due to personal disappointment. In the line of Friedman and Hayek, it is often
argued that risktaking and innovation are essential to a firm and hence society if
it is to make efficiency gains. University of Buckingham Professor Norman Barry
therefore concludes: Developments in AngloAmerican capitalism may render the
106
Henderson, David (2001), Misguided Virtue: False Notions of Corporate Social Responsibility,
Wellington: New Zealand Business Roundtable, June, p. 13.
107
Kapstein, Ethan B. (2001), The Corporate Ethics Crusade, Foreign Affairs 5, September, p. 106.
108
ORiordan, Timothy (1993), The Politics of Sustainability; in: Kerry Turner (editor) (1993),
Sustainable Environmental Economics and Management, London: Belhaven Press, p. 37.
109
Mahathir, Datuk Seri & Jose Lutzenberger (1992), Ecoimperialism and Biomonopoly at the
Earth Summit, New Perspectives Quarterly, 9, pp. 5659; Jhamtani, Hira (1996), The Imperialism of
Northern NGOs, Earth Island Journal, 7, pp. 1012.
41
arguments about corporate social responsibility a little pass. For Barry, moral
behavior is primarily a matter of learning the rules of just conduct. What really
matters is a generic moral code which includes respect for justly acquired property;
the sanctity of contract; the objective verdict of the market; (mainly) negative
individual rights; and predictable, nonretrospective laws.110 According to Barry,
the generic moral code, from which Humean conventions derive their ethical
validation, is the only one capable of uniting the varieties of capitalism under a
common set of moral principles. And that is the only business ethics that globalization
requires.111
These and other serious questionings have slowly been integrated in business ethics
manuals, which have grained credence at MBA (Masters in Business Administration)
courses. Throughout the 1980s and 1990s, MBA students with a social heart, where
sent off to nongovernmental organizations, where their business insights were
applied. Nowadays, the same students are getting topjobs at multinational firms, as
business ethics has grained importance on the corporate agenda. Fifty surveyed
business schools reported a fivefold increase in the number of standalone ethics
courses between 1999 and 2007, with 25 percent of the schools requiring students to
take a course in business ethics.112 Old assumptions that business ethics is a soft
subject only for treehuggers, veggielovers and scaremongers is no longer
shared. Business ethics in the MBA context is now about social entrepreneurism,
about making the world a better place. Continuous corporate education programs and
executive training should focus more on learning how to diagnose ethical issues in
uncertain environments and how to take action to improve them. More research is
warranted on business ethics pedagogy, not only to prevent future scandals, but also
for teaching it in a transformational way. Besides inculcating particular moral values
at home or in the workplace, a systematic training in thinking and reasoning about
ethics is equally crucial to get a better feeling for the art of conducting business.
In sum, what has become obvious so far is that the state of global opinion on business
ethics matters is seriously fractured. It remains to be been whether a sort of global
justice paradigm, which could inspire and benefit us all, is desirable and feasible.
Would a radically different approach be capable of breaking the deadlock? In the next
part, I will analyze whether a moraltheological perspective can break the impasse.
110
Barry, Norman (1999) AngloAmerican Capitalism and the Ethics of Business, Wellington: New
Zealand Business Roundtable.
111
Barry, Norman (2001), Ethics, Conventions, and Capitalism; in: Griffiths, Brian; Robert Sirico,
Norman Barry & Frank Field, Capitalism, Morality and Markets, London: The Institute of Economic
Affairs.
112
Hartman, Laura; Lisa Jones Christensen & Ellen Peirce (2007), Ethics, CSR, and Sustainability
Education in the Financial Times Top 50 Global Business Schools: Baseline Data and Future Research
Directions, Journal of Business Ethics, 73, pp. 347368.
42
PART II
CORPORATE MORALITY IN THEOLOGICAL PERSPECTIVE
1. At the Crossroads of Economics and Theology
So far, this study has analyzed philosophical underpinnings, political assumptions,

some managerial decisionmaking procedures, and socioeconomic implications of
business ethics. The works of philosophers, politicians, economists, sociologists and
corporate managers in business ethics have all contributed to present qualitatively
different perspectives to the debate on ethical obligations, moral duties of
corporations and its share and stakeholders. So far, this occasional paper has made
clear however that these approaches are not fully capable to grasp to magnitude of
what is at stake in the business universe. It seems that the relationship between
business and ethics remains profoundly paradoxical. The central question in this part
is whether the discipline of moral theology can break an impasse.113
The main objective of this second part is to examine whether an interdisciplinary

dialogue between business ethicists and moral theologians can help to advance the
debate. At first sight this seems a rather odd proposition. A dialogue between business
ethics and moral theology seems problematic with many questions coming to mind. Is
economics not about modeling and theology about dogmas? Is economics not about
this world and theology about the other world? How does a theologians demand for
solidarity square with an economists quest for profit maximization? Many
economists doubt whether theologians indeed have a task of constructing a religiously
informed public philosophy. Economics is most commonly regarded as essentially
foreign to theology, as something rather opposite. It seems that economists ignore
moraltheological questions at best. Or they treat the churchs teachings with
contempt at worst. Theologians are often regarded as moralists engaged in pulpit
bullying.
The argument that moral theologians are not adding value to the business ethics
debate is shared by many. Sociologists, for example, argue that the declining
influence of mainstream Protestantism and Catholicism in Western Europe is
attributable to overaggressive social activism, which has alienated the faithful.
Economists often argue that churches, synagogues and mosques are supposed to
preach about personal behavior and spiritual yearnings, about matters related to
family. If the discussion is about business matters concerning profit and losses, the
pulpits are supposed to remain silent. In the United States, it is often argued that the
role of religious authorities is not to be antimarket or promarket, but merely to be
life affirming. Didnt Jesus expel the moneychargers from the Temple? Didnt Jesus
113
Moral theology is the part of theology that examines the nature of the human action, its foundations,
and the conditions within which it becomes moral. The adjective moral is the etymological descendent
of moralis, which like its Greek predecessor ethikos, means pertaining to character. Cicero invented the
word moralis in his work De Fato to translate the Greek ethikos. Due to its scope, this study will
understand moral theology in terms of a discourse on fundamental questions of conscience that are
inherent to conducting business.
43
refer to the Temple as his Fathers house which was being made into house of trade
(John 2:16) or den of robbers (Matthew 21:13 and Mark 11:17)?
Yale University philosopher Richard De George argues that theologians have not
adequately addressed the question of whether there are particular theological tasks in
the field as they define it, and whether, if they define it, the theological definition is
different from the philosophical. He furthermore argues that philosophers and
theologians might have similar research interests in business ethics and that a
dialogue between them may be mutually beneficial. However, arguing that
theologians have a specific task carved out for themselves in the business ethics
debate would go too far in his opinion. According to De George, theologians can
argue strictly from reason, but unless a theological argument has a theological
premise, it is not clear what distinguishes it as a theological argument or
conclusions. He moreover downplays the role of theologians and preachers as they
often give the impression that they think the problems of international poverty will
dissolve before love and charity. He also argues that the approach of many
theologians to problems of world poverty focuses on individuals or the Churches
themselves. For De George, theologians have a legitimate task ahead of them in
attempting to change the allegiance of the Church in Latin America from its ties with
the rich elites to solidarity with the poor masses. At the same time, however, he
warns that such involvement leans towards Marxism, which in itself is a dangerous
choice: If liberation theologians seek to overthrow and replace the free enterprise
system with some sort of socialism, why should they be interested in the moral issues
within the system that they wish to overthrow? De George therefore questions
whether liberation theology is really theology. De George concludes that there is only
one ethics or morality: There is not a Christian ethics, a Jewish ethics, a Muslim
ethics, a secular ethics, and so on. Ethics is universal. What is right is right for all;
what is wrong is wrong for all similarly placed.114 If moral theologians have a role to
play in the business ethics debate, then they should focus on developing character and
provide motivation for acting morally.
A specific role for theology is not only downplayed by economists or philosophers,

but also from within the church. In the first place, not many theologians seem to be
interested in addressing business matters. Secondly, not many theologians have
knowledge about economic models and systems. Lack of knowledge or sheer
ignorance makes theological debates on matters related to economics often poor.
However, the poor dialogue between economics and theology is not an excuse. A
general lack of investigation is not to say that economics is irrelevant to theology.
Thirdly, influential voices within the church see little advantage, attraction, need, or
prospect to engage in a critical dialogue with the discipline of economics. Some
theologians argue that a corporation does not need the imprimatur of a moral
theologian to defend its pursuit of profit and justify tough managerial decisions.
In addition, churches throughout the world have a direct impact on economic life.
Through pension funds, donations and institutional endowments, wealthy
archdioceses in North America and Western Europe channel billions of dollars, which
have important economic ramifications. The poorer archdioceses in the South often
114
De George, Richard (1986), Theological Ethics and Business Ethics, Journal of Business Ethics,
6, pp. 421430.
44
make explicit political statements, which have direct impact on economics and
business life. Religion and theology are often used as a tool for confrontational
socialeconomic change. Simply by making choices, which necessarily have an
impact on society and culture, churches and theologians subject themselves to societal
evaluations.
In the following section, this study will therefore defend the thesis that theological
reflection on business practices is neither unrealistic nor unnecessary. It is neither
uncalled for, nor counterproductive. This study will argue that business ethicists and
moral theologians should meet each other at the crossroads of corporate morality.
First, I will present a historical overview of the dialogue that already has taken place
between business ethics and moral theology. As will become clear, the relationship
has often been problematic and has taken distinct dimensions throughout the
centuries.
45
2. Business Ethics and Moral Theology in Historical Perspective
Ever since Christianity arose in the Middle East, theologians and economists have
persistently debated on the morality of economic systems, models and its decision
makers. Theologians and church authorities alike have especially played a major role
and consequently had a huge impact on the world of finance in past centuries.
The most common way in which church officials and theologians have addressed
issues related to business throughout the ages can be called the moralistic approach.
General moral prohibitions against stealing and lying, and general moral demands for
helping the poor and visiting the prisoners have been common throughout ages during
the traditional Sunday sermon. As a result, Christian moral theology has a rich
tradition of reflections on theological virtues of charity and prudence, just wage and
justice. It moreover provided pastoral guidelines to avoid usury and avarice,
mendacity and covetousness. Benedictine monasteries already started to teach that
profit seeking is related to the love of God as early as in the sixth century. The
moralistic approach has been merging religious and moral obligations.
Thomas Aquinas (12251274), the most famous Dominican priest, has been crucial in
the Catholic tradition of moral theology. By turning Aristotelian categories into
Catholic dogmas, he articulated the natural law tradition in the thirteenth century. His
theology later on was incorporated in the great medieval manuals of moral theology.
His most mature writings are to be found in the influential Summa Theologiae, which
he ended in 1273. He defined the primary principle of natural law on the selfevident
belief that good ought to be pursued by action and evil avoided. The five
fundamental goods or natural laws consist of human life, the union of male and
female, care of ones children, a wellordered society, and knowledge, particularly of
God. These are the selfevident goods of the natural law, which humans are required
to pursue and whose destruction is entirely forbidden.
Aquinas also revised Platos cardinal virtues, which include prudence, justice,
courage, and moderation. These virtues enable a person to pursue fundamental goods.
Aquinas teleological structure of moral theory leads from primary injunctions, which
consist of the above mentioned five fundamental goods, down to secondary precepts,
including normative claims regarding marriage, property, labor conditions and other
issues. According to Aquinas, the fundamental principles of natural law are ultimately
decrees implanted in human nature by God. Individuals can discover such decrees by
carefully studying human nature. These are the theological claims intrinsically linked
to the natural law theory.
For this studys area of concern, it is important to realize that Aquinas did not regard
the issue of private property as a natural right, but merely as a conventional means of
securing an orderly society. According to Aquinas, the use of private property must
serve the needs of all humanity. In referring to the state of poverty, Aquinas asserts
that all things are common property, so that there is no sin in taking anothers
property. Nonetheless, he adds that temporal goods are ours as to their ownership,
46
but as to their use, they belong not to us alone but also to those whose needs can be
served from what we have over and above what we need.115
Regarding business transactions, Aquinas warns against (1) taking advantage of the
buyers dire need or ignorance to extort a price for a product in excess of its just price
(which is the price estimated by the market, as a function of the products utility to
man and its relative scarcity); (2) failing to inform a buyer of a known product defect
that may impose unknown risks on the buyer or lower its true value and by
subsequently failing to adequately compensate the buyer; (3) pursuing profit as an end
which has no limit instead of as a means for duly supporting oneself, ones family, or
ones society; and finally (4) charging interest for money lent, a practice constituting
usury since it appropriates a return for something which is deemed without value.
Aquinas related profit to leading a virtuous life. He has no problem with business as
long as it related to the craft itself: ergo negotiari secundum se non est illicitim.
According to Aquinas, business becomes problematic if is leads to vice. Aquinas
therefore distinguishes four virtuous ends to justify business enterprise: sustaining
ones household, helping the poor, the good of the public utility and gain as a due
payment for labor116
In sum, Aquinas natural law theology is characterized by a teleological focus, an

integrated approach of ethical principles and practical virtues; a concern for concrete
moral dilemmas combined with a pragmatic rules of resolving an impasse; an
immense confidence in the human capacity in resolving conflicts in a rational way,
and a flexible, pragmatic way to resolve moral impasses in a contextual approach,
adaptable to changing historical situations and cultural circumstances. According to
Velasquez and Brady, Aquinas emphasis on reason, imbued catholic moral theology
with an extraordinary confidence in the ability of natural reasoning to grasp the
fundamentals of morality, a confidence, in fact, that morality itself has an objective
and rational basis and constitutes an intelligible orderly system.117
The scholastics of the Middle Ages also greatly deliberated on business matters. The
Franciscan Pierre de Jean Olivi (12481298) was the first scholar to develop
subjective utility theory. He pioneered the concept of capital as a fund of money
invested in a business venture. Olivis theories were later picked up by the also
Franciscan Bernardino of Siena (13801444) and Dominican Antonio Pierozzi of
Florence (13891459), who classified money as something fungible and sterile. By
arguing that pecunia pecuniam non parit (money does not breed money) the
scholastics rejected the notion that money can bear fruit by being reinvested. By not
allowing a distinction between capital and money, Catholics were forbidden to charge
interest.
In the next century, the Spanish Scholastics of the School of Salamanca substantially
advanced the debate. Martin de Azpilcueta (14931586), better known as Doctor
Navarrus, and Tomas de Mercado (15301576) developed the notion of purchasing
115
Aquinas, Thomas (1273), Summa Theologiae, Westminster, Maryland: Benzinger Brothers (1947
edition), IIII, Q. 66a7 and 32a5.
116
Idem, IIaIIae Q 77, art. 4.
117
Velasquez, Manuel & Neil Brady (1997), Natural Law and Business Ethics, Business Ethics
47
power parity of exchange rates and the supply and demand equation of the value of
money. The School of Salamanca also raised serious objections to price regulation as
it might distort markets and encourage corruption of public authorities. The Jesuit
Luis de Molina (15351601) spread the Salamanca tradition to Coimbra and Evora in
Portugal. Economic theory on commerce and development further flourished in the
wake of the discovery of the Americas, the New World.118
At a stage when the influence of the School of Salamanca was waning, another crucial
contribution was made by a Flemish Jesuit. In his most wellknow work entitled De
justitia et jure, published in Louvain in 1605, the moral theologian Leonardus Lessius
(15541623) reflected on issues related to international trade, money value and
charging interest rates on loans. Lessius used the conclusions of his Spanish
predecessors as point of departure but quickly established new theories. His work on
justice and law has been praised by historians and economists for its nuanced
treatment of business matters involving interest. Lessius insights were based on his
close contact with the business community and financial establishment of Antwerp.
The master of scholastic economic analysis was moreover the first scholar who
consistently argued that creditors should be rewarded for lending money, because they
temporarily forgo liquidity. The socalled carentia pecuniae clause holds that money
in hand is worth more than portfolio paper held by a custodian. The value of liquidity
emerges and will remain at the centerstage of finance. According to Lessius, by
temporarily converting liquid assets into illiquid contracts, bankers and speculators
should be rewarded. At the same time, however, Lessius argued that potential
creditors should not keep too much liquid resources from circulation. The risk of a
credit shortage or liquidity squeeze might cause higher interest rates, which for him is
morally reprehensible.119
Lessius is one of the first scholars who perfectly understood the functioning of the
freemarket system by pointing at the disastrous sideeffects of price fixing and state
intervention in periods of shortage. Lessius, however, should not be regarded as a
market absolutist. He argues that a just price cannot simply be established by the
market as a dynamic outcome of the law of supply and demand, but rather on the
market by individual market players, who act as responsible moral subjects. Lessius
clearly rejects a vita nummularia (life ruled by money) solely aimed at making money
and acquiring riches (pecuniam ac divitias). For Lessius, there is a clear link between
business and morality. The socalled iudicium prudens (prudent judgment) stands out
throughout all his work.120
One of the most prolific times of moraltheological writing on business ethics was the
Reformation. The writing of Martin Luther (14831546) and Jean Calvin (1509
1564) heralded a new era for the relationship of theology and economics. The pursuit
of profit by means of systematic and rational behavior, characterized by rational
bookkeeping, was crucial in the advancement of capitalism. By living frugally, being
118
Rothbard, Murray (1999), Economic Theory before Adam Smith. An Austrian Perspective on the
History of Economic Thought, Cheltenham: Edward Elgar.
119
Baeck, Louis (1994), The Mediterranean Tradition in Economic Thought, London: Routledge, p.
179.
120
De Marchi, Neil & Craufurd Goodwin (1999), Economic Engagements with Art, Durham: Duke
48
austere and persistent, people could overcome their anxieties. The faithful were
encouraged to make instrumental calculations of cost and benefit, as well as to
employ a purely formal mode of thinking and reason. The notion that hard work, a
sense of duty, moral character, selfcontrol, the idea of work as a calling or God
given vocation, and perseverance would bring the good life associated with material
wealth. Even more importantly, such a good life was attainable to all who would try
it. Otherworldly austerity would eventually lead to the acquisition of wealth,
investment, and systematic saving.121 Calvinists in Europe and later Puritans in
America interpreted profit as a sign of salvation.
The theological teachings of Luther and Calvin transformed the moral attitude and
ethical assumptions of Christianity that fostered the development of business, which
previously were characterized by the virtue of poverty, asceticism and honoring
intellectual life over commerce. Luther and Calvin fundamentally transformed these
virtues, by emphasizing the glorious value of austerity, industry, and thrift. Calvinism
introduced the notion of predestination, in which God not only foreknows, but also
actively wills the salvation of some, and damnation of others. The emphasis given by
Reformed pastors to the uncertainty of salvation had major psychological
consequences for the masses. In their pastoral deliberations, preachers argued that
there are signs of election. The clearest sign is obtaining material wealth, directly
related to business activities. Preachers emphasized that people might not attain
salvation by achieving business excellence, but they can have some assurance that
they are at least on the way. Calvin argued that one is to serve not only in vocation,
but also through ones vocation (per vocationem).
The German sociologist Max Weber (18641920) first observed that the proportion of
leading industrialists, traders, financiers, and technical experts was far greater among
Protestants than Catholics in Europe of the sixteenth and seventeenth century. He
grasped that something crucially important about the inspirational sources of
capitalism. While contemplating on the origins of capitalism, Weber noticed that
dedicated, industrious and persistent people were driven by a different work ethic,
motivated to earn as much as they could and go constantly beyond their earlier gains.
He concluded that Protestant, especially Calvinist, religious values leads people to
have a moral duty to constantly better their condition. According to Weber, it was this
Protestant Ethic that helped justify the capitalist system exactly by providing a moral
justification for the pursuit of wealth, which was necessary for the rise of capitalism.
Weber moreover demonstrated that the Protestant ethic, whose original intention was
to remove all concern with worksrighteousness, ended up pushing the faithful
121
A typical passage of Calvin makes the point: When the Scripture enjoins us to lay aside private
regard to ourselves, it not only divests our minds of an excessive longing for wealth, or power, or
human favor, but eradicates all ambition and thirst for worldly glory, and other more secret pests. He
who has learnt to look to God in everything he does is at the same time diverted from all vain thoughts.
This is that selfdenial which Christ so strongly enforces on his disciples from the very outset. Self
denial has respect partly to men and partly (more especially) to God. For when Scripture enjoins us, in
regard to our fellow men, to prefer them in honor to ourselves, and sincerely labor to promote their
advantage he gives us commands which our mind is utterly incapable of obeying until its natural
feelings are suppressed. Calvin, John, Institutes of the Christian Religion; in: Beach, Waldo & H.
Richard Niebuhr (editors) (1955), Christian Ethics: Sources of the Living Tradition, New York: The
Ronald Press, p. 284.
49
towards an unprecedented obsession with works. This unintentional and unforeseen

consequence eventually propelled wealth creation and technological innovation.
Weber correctly teaches us that social success largely depends on the spiritual and
moral qualities embodied in the practices of its economic agents. It is important to
stress that Webers assessment of capitalism was far from uniformly positive. He
argued that once capitalism becomes divorced from its original religious impulses it
turns into an iron cage from which we are unable to extricate ourselves. He describes
the fate of the modern man in terms as bleak as his motivational foundations are
mechanized.122 Nevertheless, as accurately synthesized by outspoken Dutch
theologian Van Hoogstraten: Webers analyses makes undeniably clear that the
enormous impact of ideology and religious thought on society and economy is
incontestable: the study of economy should start with a deep economic analysis, for
it acknowledges the interconnectedness of economy, morals, and religion.123
The impact of Luther and Calvins teachings can hardly be overstated. Due to the
supposed links between Protestantism and capitalism, Catholicism has been regarded
as notoriously reactionary during a long period of time. Catholic doctrines against
usury, fair price, restricted hours and the proliferation of holy days have long been
considered as enemies of progress. There is sociological evidence that Catholic
countries in Europe were relatively late in the Industrial Revolution. The Papal States
have also been notoriously retarded in economic development, remaining locked in
medieval customs and methods until the end of the 19th century. The argument that
Catholicism and modernity are at odds continues until modern days. Catholic
countries from the Brazil, the Philippines to Poland have been relatively late in
achieving democracy. In many parts of the world, Catholicism continues to be
reluctant to come to terms with capitalism. Especially in developing countries, the
Catholic Church and its theologians continue to struggle with freemarket models.
The debate of the impact of religion on economic behavior is poised to continue. It is

worth mentioning that the most recent academic dispute on the issue concerns the
policies of former Fedpresident Alan Greenspan. For most academic observers, there
is little doubt that he was an extraordinarily successful chairman of the most
important central bank in the world. However, only a couple of years after his
retirement, several observers started to question his legacy, especially regarding his
failure to supervise and regulate financial institutions against liquidity risk. According
to Paul De Grauwe, Louvains most articulate economics professor: The root cause
is the religious belief of Greenspan in the benevolence of markets and perniciousness
of government interventions. De Grauwe moreover argues that the corollary of this
religious optimism in the wondrous workings of the financial markets is the belief that
governments and the Fed can do nothing to regulate these new financial
instruments.124 The fact that religion indeed time and again stands in the way of
rational analysis only make a theological examination more valuable.
122
Weber, Max (1904), The Protestant Ethic and the Spirit of Capitalism, New York: Charles
Scribner (1958 edition).
123
Van Hoogstraten, Hans Dirk (2001), Deep Economy: Caring for Ecology, Humanity and
Religion, Cambridge: James Clarke, p. 28.
124
De Grauwe, Paul (2008), The risks of being Chairman in the Age of Turbulence, International
Finance (forthcoming).
50
3. The Social Magisterium of the Roman Catholic Church
After having briefly explored the historic contributions of moral theology in the
business ethics debate, it is now imperative to turn to the official social teaching of the
Roman Catholic Church. Throughout the centuries, Catholic social teaching (CST) in
general, and the encyclical tradition in particular, have been chief custodians of
Christian ethics. Its considerable impact has led to growing recognition and obedience
to papal pronouncements on matters of faith and morals. An indepth examination is
equally warranted from an extraecclesial perspective because the Holy See has
substantially contributed to structure debates on warfare, social development and
human rights issues.
Before scrutinizing CST, it is important to realize that encyclicals are neither fixed,
timeless, universally applicable and immutable statements, nor infallible papal
pronouncement.125 Throughout history, CST has often been presented as a
fundamentally unchanged and unchangeable theoretical framework based on natural
law revelation. According to Verstraeten, this has led to a confusion between the
unchangeable formal principles belonging to the duplex ordo of natural law and
divine revelation, and a historically contingent political and social third way theory,
which was legitimated as its contemporary expression.126 The Second Vatican
Council of the 1960s overcame the ideological tension by adopting the concept of
signa temporum (signs of the times) as methodological base. While analyzing the
contributions of the social magisterium of the Roman Catholic Church, this study will
therefore mostly refer to Catholic social teaching and try to avoid the controversial
concept of doctrine.
In the encyclical Redemptoris Missio, promulgated in 1990, Pope John Paul II

stressed the following: The church addresses people with full respect for their
freedom. Her mission does not restrict freedom but rather promotes it. The church
proposes; she imposes nothing. She respects individuals and cultures, and she honors
125
The contingent character of Catholic social teaching becomes evident upon examining some
medieval documents. In the bull Romanus Pontifex, Pope Nicolas VI (14471455), for example,
promises rule over the Earth to the Portuguese monarchs under the following conditions: We, giving
due consideration to each and every one of the things indicated, grant full and free authorization to
invade, conquer, battle, defeat, and subject any Saracens, pagans, and other enemies of Christ,
wherever they may be, and the kingdoms, duchies, principalities, dominions and the fixed and
moveable property as they have and possess; and to reduce to perpetual servitude their persons, and to
set apart for themselves and their successors, and take possession of an apply for their own use and
utility and that of their successors, their kingdoms, duchies, principalities, dominions, possessions and
property. Another example is the bull Inter Coetera, promulgated by Pope Alexander VI (1492
1503), granting the monarchs of Castile and Leon similar power over islands and mainlands found and
to be found, discovered or to be discovered by the authority of almighty God conferred on us in Saint
Peter, and as of the vicariate of Jesus Christ, which we exercise on Earth in perpetuity. For more
examples, see: Suess, Paulo (1992), A conquista espiritual, Petrpolis, Rio de Janeiro: Editora
Vozes, p. 227 and p. 249.
126
Verstraeten, Johan (2001), Rethinking Catholic Social Thought as Tradition; in: Boswell,
Jonathan; Francis McHugh & Johan Verstraeten (2001), Catholic Social Thought: Twilight or
Renaissance? Louvain: Peeters, p. 61.
51
the sanctuary of conscience (39).127 The Vatican clearly recognizes that authentic
faith cannot be coerced upon people.
The Congregation for the Doctrine of Faith has extensively written about the
relationship between the Gospel life and social life. It argues that CST is born of
the encounter of the Gospel message and of its demands summarized in the supreme
commandment of love of God and neighbor in justice with the problems emanating
from the life of society. It moreover reiterates the following: Being essentially
orientated toward action, this teaching develops in accordance with the changing
circumstances of history. This is why, together with principles that are always valid, it
also involves contingent judgments. Far from constituting a closed system, it remains
constantly open to the new questions which continually arise; it requires the
contribution of all charisma, experiences and skills. The magisterium argues that the
church is a expert in humanity, which offers by her social doctrine a set of
principles for reflection and criteria for judgment and also directives for action so that
the profound changes demanded by situations of poverty and injustice may be brought
about, and this in a way which serves the true good of humanity.128
In his encyclical Mater et Magistra (1961) Pope John XXIII already stressed that it is
the churchs urgent desire that the social doctrine be studied more and more. First of
all, it should be taught as part of the daily curriculum in Catholic schools, particularly
seminaries. At the same time, the pope argues that the social doctrine should be
spread by every modern means at our disposal: daily newspapers, periodicals,
popular and scientific publications, radio and television (223).129 In Octogesima
Adveniens (1971), Pope Paul VI acknowledged the impossibility of a unified social
doctrine applicable to all contexts: In the face of such widely varying situations, it is
difficult for us to utter a unified message and to put forward a solution, which has
universal validity. In addition, It is up to these Christian communities, with the help
of the Holy Spirit, in communion with the bishops who hold responsibility and in
dialogue with other Christian brethren and all men of goodwill, to discern the options
and commitments which are called for in order to bring about the social, political and
economic changes seen in many cases to be urgently needed.130 The Congregation
for the Doctrine of the Faith argues that the orientation received from the social
doctrine of the church should stimulate an acquisition of the essential technical and
scientific skills and the seeking of moral formation of character and a deepening of
the spiritual life.131
In his encyclical Veritatis Splendor (1993), Pope John Paul II argues that the churchs
social teaching belongs to the field of moral theology, from which general attitudes,
but also to precise and specific kinds of behavior and concrete acts are presented of
commandments governing social, economic and political life.132 According to the
Compendium of the Social Doctrine of the Church, promulgated in 2004, the social
127
Pope John Paul II (1990), Redemptoris Missio, Vatican, December 7.
128
Congregation for the Doctrine of the Faith (1986), Libertatis Conscientia, Vatican, March 22,
72.
129
Pope John XXIII (1961), Mater et Magistra, Vatican, May 15.
130
Pope Paul VI (1971), Octogesima Adveniens, Vatican, May 14, 4.
131
Congregation for the Doctrine of the Faith (1986), Libertatis Conscientia, Vatican, March 22,
80.
132
Pope John Paul II (1993), Veritatis Splendor, Vatican, August 6, 99.
52
doctrine intends to help to develop authentic, believing characters and inspire them
to bear credible witness capable, by thought and by action, of modifying the
mechanisms of modern society.133 The Compendium does not list social priorities or
emerging problems. Rather, it presents itself as an instrument, which is suitable for
assisting the discernment. The magisterium is well aware that a onesizefitsall
approach is neither feasible, nor desirable.
In Pope Benedict XVIs first encyclical Deus Caritas Est (2006), the churchs social
doctrine is presented as a set of fundamental guidelines offering approaches that are
valid even beyond the confines of the church: in the face of ongoing development
these guidelines need to be addressed in the context of dialogue with all those
seriously concerned for humanity and for the world in which we live.134 The words
of the magisterium make clear that CST should always be placed in sociohistorical
perspective. Since Pacem in Terris (1963), papal encyclicals are explicitly addressed
to two different audiences: members of the Catholic Church but also to all people of
good will and therefore aim at contributing to the debate, both at the theological and
philosophical level. Even though there are limits to what any new pope can do when it
comes to developing social policy, a new pope has the power to place his own accents
and emphasize his intellectual interests.
In sum, encyclicals should be read not as the work of a doctrinal policeman, but rather
as the work of a learned and compassionate pastor who is addressing a global
audience. CST allows for disagreement, change over time and development. Only
such approach is appropriate and legitimate since the church operates in a wide
variety of political and economic systems, cultural mindsets and stages of socio
economic development. Encyclicals are as lively and varied as the Roman Catholic
Church itself. They are never the last word on a subject as they often give the debate
new impetus.
The next section will examine in detail the most pertinent encyclicals and relevant
parts of the Compendium of the Social Doctrine for the business ethics debate. A
chronological examination is an essential starting point in understanding how and
why official CST has become highly influential, not only in ecclesial but also in
economic and political circles. They deserve to be highlighted not only for intra
ecclesial reasons, but also because they coincide with the development of modern
economics. Pope John Paul IIs encyclicals deserve most attention, not only because
he was the second longest serving pope in history and the longest serving pope of the
twentieth century. His powerful presence and influence among Catholics and non
Catholics will continue throughout the world for a long time to come.
133
Pontifical Council for Justice and Peace (2004), Press Conference for the Presentation of the
Compendium of the Social Doctrine of the Church, Vatican, October 25.
134
Pope Benedict XVI (2005), Deus Caritas Est, Vatican, December 25, 27.
53
3.1. The Foundations of Catholic Social Teaching
3.1.1. Rerum Novarum (1891)
The era of modern Catholicism starts in earnest with the promulgation of the
encyclical Rerum Novarum by Leo XIII, in 1891. The encyclical was written in a time
of revolutionary change: The momentous gravity of the state of things now obtaining
fills every mind with painful apprehension; wise men are discussing it; practical men
are proposing schemes; popular meetings, legislatures, and rulers of nations are all
busied with it actually there is no question which has taken deeper hold on the
public mind (1). One year after the loss of the Papal States, the Vatican starts
focusing on the ethos of families and individuals in general, and the social situation of
the workers, their working hours, job protection, and the ability to establish savings in
particular. The encyclical defends that some opportune remedy must be found
quickly for the misery and wretchedness pressing so unjustly on the majority of the
working class (3).135
Leo XIII, who reigned between 1878 and 1903, turned out to be more critical of
socialism than capitalism. In an era in which the writings of Karl Marx where popular,
Pope Leo XIII stressed that private ownership is in accordance with the law of
nature (9). In Quod Apostolici Muneris, promulgated in December 1878, he already
defended private property and attacked socialists, Communists and Nihilists.
Thirteen years later in Rerum Novarum, the pope tried to stay clear of laissezfaire
capitalism and totalitarian socialism, which were the two extreme positions in those
days. On the one hand, he condemned the harsh working conditions of employees:
For the ancient workingmens guilds were abolished in the last century, and no other
protective organization took their place. In addition, Public institutions and the laws
set aside the ancient religion, hence, by degrees it has come to pass that working men
have been surrendered, isolated and helpless, to the hardheartedness of employers
and the greed of unchecked competition. According to the pope, this has led to
rapacious usury, which, although more than once condemned by the church, is
nevertheless, under a different guise, but with like injustice, still practiced by
covetous and grasping men (3). The encyclical is a cry of protest against the social
injustices experienced by the working class. The pope clearly voiced his concern
about the widening gap between the rich minority and poor majority.
Throughout the encyclical, the word capitalism or capitalists is never used. In

return, it directly addresses and sharply attacks socialists, who are accused of
depriving wageearners of the liberty of disposing of his wages, and thereby of all
hope and possibility of increasing his resources and of bettering his condition in life
(5). The popes words are unequivocal: What is of far greater moment, however, is
the fact that the remedy they propose is manifestly against justice. For every man has
by nature the right to possess property as his own (6). The pope furthermore
criticizes the fact that Socialists are striving against nature. Such striving is in vain:
It must be first of all recognized that the condition of things inherent in human
135
Pope Leo XIII (1891), Rerum Novarum, Vatican, May 15.
54
affairs must be borne with, for it is impossible to reduce civil society to one dead
level. For the magisterium, Social and public life can only be maintained by means
of various kinds of capacity for business and the playing of many parts; and each man,
as a rule, chooses the part which suits his own peculiar domestic condition (17).
Pope Leo XIII, who before becoming a pope had served as a papal diplomat in
Belgium, recognized that socialism as an idea and ideal was fatally flawed: It is clear
that the main tenet of socialism, community of goods, must be utterly rejected, since it
only injures those, whom it would seem meant to benefit, is directly contrary to the
natural rights of mankind, and would introduce confusion and disorder into the
commonweal. The first and most fundamental principle, therefore, if one would
undertake to alleviate the condition of the masses, must be the inviolability of private
property (33). Throughout the encyclical, the term socialism is used once and
socialists four times. In all instances, socialists are condemned because they are
against private property, natural justice, liberty. From a twentyfirst century
perspective, Pope Leo XIIIs critique on totalitarian socialism looks remarkably
prescient. Another important contribution of Rerum Novarum is the introduction of
the concept of common good. The concept originates in Platos philosophy, where is
equaled to social virtue. Aristotle incorporates the notion in his political analysis.
Thomas of Aquinas introduced the concept in the theological dictionary, which Pope
Leo XIII revived in his social encyclical. Rejecting the individualistic worldviews of
Descartes and Locke, the pope emphasizes the common teleological end or destiny of
humanity.136
The encyclical also emphasized that laborers have a right to a just salary that will
allow them to support themselves and their families. The concept of fair wage was
introduced. The encyclical also supported the rights of labor to form unions: Let the
working man and the employer make free agreements, and in particular let them agree
freely as to the wages; nevertheless, there underlies a dictate of natural justice more
imperious and ancient than any bargain between man and man, namely, that wages
ought not to be insufficient to support a frugal and wellbehaved wageearner (45).
The pope moreover sanctioned trade unions as long as they draw the two orders of
capital and labor more closely together (47) and emphasizes that it were greatly
to be desired that they should become more numerous and more efficient (49).
Initially church leaders had been hesitant to support labor rights, but Pope Leo XIII
changed course and sanctioned unions as a way to promote just wages and social
democracy. Soon after the encyclical was issued, Christian trade unions started to
spread throughout Europe. In Germany, for example, trade union membership
increased from 300,000 to 7 million between 1880 and 1914. In the same period, trade
unions in the United Kingdom increased five times. In the United States, wary of
socialism and suspicious of labor movements, appointed an investigative commission
on the issue of labor.137 It should therefore be argued that Rerum Novarum turned out
to be the main impetus for the organization of trade unions. Instead of politicizing or
promoting and ideological model, as espoused by the openly socialist trade unions,
136
De George, Richard (2004) The Invisible Hand and Thinness of the Common Good; pp. 3850; in:
Hodgson, Bernard (editor) (2004), The Invisible Hand and the Common Good, Berlin: Springer.
137
Kaufman, Bruce (2004), The Global Evolution of Industrial Relations: Ideas, People, and the
Lira, Geneva: International Labor Organization, p. 77.
55
the new Christian trade unions, inspired by the encyclical, promoted a more pragmatic
form of collective bargaining for just wages.
In sum, the encyclical is remarkable as a summary of the many issued raised at the
end of the 19th century by the Industrial Revolution and new democracies. The
Catholic Church regained influence in labor circles. The solutions proposed by the
pope, which point at combined, coordinated actions between the State, the church,
employers and employees, still hold important lessons for todays societies. Several
objectives stated by this first social encyclical remain valid and in the case of
developing countries still constitute a goal yet to be reached.
3.1.2. Quadragesimo Anno (1931)
Pope Pius XI celebrated the fortieth anniversary of Rerum Novarum by issuing

Quadragesimo anno (1931). In this encyclical, promulgated in the time of the Great
Depression, which questioned the viability of capitalism as an economic system, the
pope enlarges and refines the perspective of Rerum Novarum, reemphasizing that both
unbridled liberalism and socialism has to be opposed.
The pope argues that the capitalist economic regime has spread everywhere to such a
degree, particularly since the publication of Leo XIIIs encyclical, that it has invaded
and pervaded the economic and social life of even those outside its orbit and is
unquestionably impressing on it its advantages, disadvantages and vices, and, in a
sense, is giving it its own shape and form (103).138 The pope argues that not only
wealth but also immense power and despotic economic dictatorship has
consolidated in the hands of a few, who often are not owners but only the trustees
and managing directors of invested funds which they administer according to their
own arbitrary will and pleasure (105). The pope condemns the fact that a few
control the money flow and credit lines: This concentration of power and might, the
characteristic mark, as it were, of contemporary economic life, is the fruit that the
unlimited freedom of struggle among competitors has of its own nature produced, and
which lets only the strongest survive; and this is often the same as saying, those who
fight the most violently, those who give least heed to their conscience (107).
The pope argues that the accumulation of might and of power generates three kinds
of conflict: First, there is the struggle for economic supremacy itself; then there is the
bitter fight to gain supremacy over the State in order to use in economic struggles its
resources and authority; finally there is conflict between States themselves, not only
because countries employ their power and shape their policies to promote every
economic advantage of their citizens, but also because they seek to decide political
controversies that arise among nations through the use of their economic supremacy
and strength (108). The pope condemns might and power accumulation: Free
competition has destroyed itself; economic dictatorship has supplanted the free
market; unbridled ambition for power has likewise succeeded greed for gain; all
economic life has become tragically hard, inexorable, and cruel. In sum, economic
138
Pope Pius XI (1931), Quadragesimo Anno, Vatican, May 15.
56
imperialism and internationalism of finance or international imperialism whose

country is where profit is are sharply condemned (109).
In the next sessions, the pope provides an indepth analysis of the shortcoming of
socialism. According to the pope, socialism back in the times of Rerum Novarum
could be termed almost as a single system and which maintained definite teachings
reduced into one body of doctrine. In the 1930s, however, socialism has split
chiefly into two sections, often opposing each other and even bitterly hostile, without
either one however abandoning a position fundamentally contrary to Christian truth
(111). One section of Socialism has sunk into Communism, with dramatic
consequences: Unrelenting class warfare and absolute extermination of private
ownership.
The magisterium moreover argues that when it has come to power, it is incredible
and portent like in its cruelty and inhumanity. The horrible slaughter and destruction
through which it has laid waste vast regions of eastern Europe and Asia are the
evidence; how much an enemy and how openly hostile it is to Holy Church and to
God Himself is, alas, too well proved by facts and fully known to all. The church
therefore gravely condemns the folly of those who neglect to remove or change the
conditions that inflame the minds of peoples, and pave the way for the overthrow and
destruction of society (112). The magisterium argues that the other section, which
has kept the name Socialism, is surely more moderate. It is less critical of this
version: In a certain measure approaches the truths which Christian tradition has
always held sacred; for it cannot be denied that its demands at times come very near
those that Christian reformers of society justly insist upon (113). At the same time,
the magisterium warns that those who want to be apostles among socialists ought to
profess Christian truth whole and entire, openly and sincerely, and not connive at
error in any way. If they truly wish to be heralds of the Gospel, let them above all
strive to show to socialists that socialist claims, so far as they are just, are far more
strongly supported by the principles of Christian faith and much more effectively
promoted through the power of Christian charity (116).
The conclusions that the magisterium draws concerning socialism leaves no doubts:
If Socialism, like all errors, contains some truth (which, moreover, the Supreme
Pontiffs have never denied), it is based nevertheless on a theory of human society
peculiar to itself and irreconcilable with true Christianity. Religious socialism and
Christian socialism are contradictory terms; no one can be at the same time a good
Catholic and a true socialist (120). Pope Pius XI made clear that socialism is
intrinsically evil because it disregards basic Christian tenets regarding private
property and class relations.139 Although liberalism is not as sharply condemned as
socialism, it is also criticized in Quadragesimo Anno. The pope emphasizes that It
belongs to Our Pastoral Office to warn these persons of the grave and imminent evil:
let all remember that Liberalism is the father of this Socialism that is pervading
morality and culture and that Bolshevism will be its heir (122).
139
Pope Pius XI reiterated this line of argument one more time in his encyclical Divini Redemptoris,
promulgated in 1937, condemning the doctrine of communism and the Soviet regime as intrinsically
perverse.
57
One of the most noteworthy contributions of this encyclical to the debate is the
introduction of the principle of subsidiarity. The principle was originally articulated in
the context of Pope Pius XIs quest to distinguish Catholic social teaching from
Italian fascism. The original of the concept of subsidiarity is Aristotle, who structured
society in organic models, each with different tasks and responsibilities. Each groups
task and responsibility has been understood autonomously and can only interfere with
other groups in cases of absolute need. Thomas of Aquinas further elaborated on the
concept by placing it in the context of human dignity, understood as the recognition
for individual freedom in relation to larger groups and the State. In the Thomist
perspective, personal ends and interests are relegated to the second place when they
conflict with the principle of common good.
In the encyclical, the pope introduces the concept of subsidiarity in the following
terms: As history abundantly proves, it is true that on account of changed conditions
many things which were done by small associations in former times cannot be done
now save by large associations. Still, that most weighty principle, which cannot be set
aside or changed, remains fixed and unshaken in social philosophy: Just as it is
gravely wrong to take from individuals what they can accomplish by their own
initiative and industry and give it to the community, so also it is an injustice and at the
same time a grave evil and disturbance of right order to assign to a greater and higher
association what lesser and subordinate organizations can do, for every social activity
ought of its very nature to furnish help to the members of the body social, and never
destroy and absorb them (79). For the magisterium, it is clear that the principle of
subsidiarity must direct economic life. The principle should help to define the limits
of state intervention in private and public economic life. Ever since the pope launched
the concept, subsidiarity has remained at the core of the churchs teachings and
pastoral guidelines. Pope Pius XII, for example, emphasized in 1946 that the principle
is valid for social life and all its grades and valid also for the life of the church
without prejudice to its hierarchical structure.140 The principle has also gained
credence in political circles and even entered legal documents.
3.1.3. Mater et Magistra (1961)
The next encyclical, which is relevant for our study, is Pope John XXIIIs encyclical
on Christianity and social progress in May 1961. Pope John XXIII reiterates Pope
Pius XI emphasis that there exists a fundamental opposition between Communism
and Christianity and underlines that no Catholic could subscribe even to moderate
Socialism. According to Pope John XXIII, the reason is that Socialism is founded
on a doctrine of human society which is bounded by time and takes no account of any
objective other than that of material wellbeing. The pope therefore concludes that
it proposes a form of social organization which aims solely at production, it places
too severe a restraint on human liberty, at the same time flouting the true notion of
social authority (34).141
140
Himes, Kenneth (2004), Modern Catholic Social Teaching Commentaries and Interpretations,
Washington, D.C.: Georgetown University Press, p. 92.
141
58
In the next sessions, Pope John XXIII addresses the question of freemarket
economies. The magisterium criticizes the fact that unbridled ambition for
domination has succeeded the desire for gain; the whole economic regime has become
hard, cruel and relentless in frightful measure (36). The pope calls for the
reestablishment of the economic world within the framework of the moral order and
the subordination of individual and group interests to the interest of the common good
as the principal remedies for these evils. In addition, Public authority should resume
its duty of promoting the common good of all and there should be cooperation on
a world scale for the economic welfare of all nations (37). The magisterium is clear
that all forms of economic enterprise must be governed by the principles of social
justice and charity (39) and mans aim must be to achieve in social justice a
national and international juridical order, with its network of public and private
institutions, in which all economic activity can be conducted not merely for private
gain but also in the interests of the common good (40). For the first time, the pope
observes a marked disparity in the economic wealth possessed by different
countries (48). The magisterium observes many changes, including the break
away from colonialism and the attainment of political independence by the peoples of
Asia and Africa (49). The situation is not further examined in detail but the
magisterium is clearly aware of our responsibility to take up this torch (50).
The pope also directly refers to the role of corporations: A sane view of the common
good must be present and operative in men invested with public authority. They must
take account of all those social conditions which favor the full development of human
personality. Moreover, we consider it altogether vital that the numerous intermediary
bodies and corporate enterpriseswhich are, so to say, the main vehicle of this social
growthbe really autonomous, and loyally collaborate in pursuit of their own
specific interests and those of the common good. For these groups must themselves
necessarily present the form and substance of a true community, and this will only be
the case if they treat their individual members as human persons and encourage them
to take an active part in the ordering of their lives (65). Corporate enterprises have a
special role in the quest for full development of the human personality.
The magisterium seems especially keen on increasing participation of workers in

specific enterprises. It reiterates that it is convinced that employees are justified in
wishing to participate in the activity of the industrial concern for which they work.
At the same time, the magisterium admits that it is not possible to lay down hard and
fast rules regarding the manner of such participation, for this must depend upon
prevailing conditions, which vary from firm to firm and are frequently subject to rapid
and substantial alteration. It nevertheless underlines the need for giving workers an
active part in the business of the corporation for which they work be it a private or a
public one. Every effort must be made to ensure that the enterprise is indeed a true
human community, concerned about the needs, the activities and the standing of each
of its members (91). The pope moreover stresses the importance of loyalty in the
common enterprise from the side of workers and understanding and appreciation from
the side of the employers (92). Further on in the encyclical, the magisterium adds
that private enterprise too must contribute to an economic and social balance in the
different areas of the same political community. Here the pope applies the subsidiarity
principle to the relationship between public authority and private enterprise (152).
The same principle is also observed in the context of state and public ownership: The
59
State and other agencies of public law must not extend their ownership beyond what
is clearly required by considerations of the common good properly understood, and
even then there must be safeguards. Otherwise private ownership could be reduced
beyond measure, or, even worse, completely destroyed (117).
Finally, the magisterium argues that probably the most difficult problem today
concerns the relationship between economically advanced countries and ones subject
to extreme poverty. It calls for solidarity between nations, not only out of charity but
also out of mere selfinterest: The nations of the world are becoming more and more
dependent on one another and it will not be possible to preserve a lasting peace so
long as glaring economic and social imbalances persist (157). Economically
developed nations are called to give technical and financial aid, without gaining
control over the political situation in the poorer countries (171). Disguised aid is
regarded as a new form of colonialism (172). According to the magisterium, the
only possible solutions reside in respect for the laws of life (193), education towards
sense of responsibility (195), and worldwide cooperation (200). These solutions are
a clear example of how Catholic social teaching has shifted from natural law to a
more personalist approach. This epistemological shift was further deepened during the
Second Vatican Council.
3.1.4. Pacem in Terris (1963)
It took only two years before Pope John XXIII again addresses several issues related
to this study. The main topic of the encyclical is peace on earth, which according to
the pope, can never be established, never guaranteed, except by the diligent
observance of the divinely established order.142 The encyclical pays considerable
attention to the issue of economic rights. The magisterium argues that in the economic
sphere, a man has the inherent right not only to be given the opportunity to work, but
also to be allowed the exercise of personal initiative in the work he does (18). The
economic conditions in which a man works must not be such as to weaken his
physical or moral fiber (19). It moreover a consequence of mans personal dignity
that his right to engage in economic activities is suited to his degree of
responsibility (20). The pope also reiterates the right to private ownership of
property, including that of productive goods (21). He adds, however, that such the
right to own private property entails a social obligation as well (22).
In the section on the evolution of economically lessdeveloped countries, the

magisterium repeats its appeal to the more wealthy nations to render every kind of
assistance to those States, which are still in the process of economic development
(121). The result the magisterium is looking for is rather optimistic: The poorer
States shall in as short a time as possible attain to a degree of economic development
that enables their citizens to live in conditions more in keeping with their human
dignity (122). However, it is well aware that the process of economic development
is not only depending on the goodwill of developed nations. Developing countries
have important challenge ahead: They must be conscious that they are themselves
playing the major role in their economic and social development; that they are
142
Pope John XXIII (1963), Pacem in Terris, Vatican, April 11.
60
themselves to shoulder the main burden of it (123). The wealthier states are called
to also repudiate any policy of domination (125).
3.1.5. Gaudium et Spes (1965)
The Second Vatican Council profoundly transformed the Catholic Church. Its
theology prior to the Second Vatican Council sometimes overemphasized Gods
transcendence and thus indirectly endorsed a more mechanic, fixed view of the world.
Before the 1960s, Catholic social teaching was mostly based on the assumption that
nature is an external resource, a given habitat to be exploited. At best, nature was
regarded as a poetic inspiration, at worst as virgin business territory. This dramatically
changes with the Second Vatican Council, which reclaimed the incarnational model
by emphasizing Gods imminence in nature. The Second Vatican Council introduces a
personoriented approach. By stressing a revelation from below, theology itself is no
longer detached from human suffering, economic exploitation or ecological
degradation. The conciliar document Gaudium et Spes, which is the Pastoral
Constitution on the Church in the Modern World, examines the situation of men in
the modern world. The concept of signa temporum becomes the methodological base
for interpreting the social teachings. The magisterium argues that the social teachings
must interpreted in a language intelligible to each generation, so it can respond to
the perennial questions which men ask about this present life and the life to come, and
about the relationship of the one to the other (4).143
One of the first signs of the times that the Conciliar Fathers analyze is the growing
conviction that humanity can and should increasingly consolidate its control over
creation. At the same time, the Fathers argue that it devolves on humanity to
establish a political, social and economic order, which will increasingly serve man
and help individuals as well as groups to affirm and develop the dignity proper to
them. Injustice and unequal distribution between nations is criticized: Nations on
the road to progress, like those recently made independent, desire to participate in the
goods of modern civilization, not only in the political field but also economically, and
to play their part freely on the world scene, still they continually fall behind while
very often their economic and other dependence on wealthier nations advances more
rapidly (5). The third chapter of the pastoral constitution addresses the economic
challenges of the mid1960s. The Conciliar Fathers first argue that man is the
source, the center, and the purpose of all economic and social life. This however
does not mean that man has unbridled domination over nature. The Conciliar Fathers
argue that many people, especially in economically advanced areas, seem, as it were,
to be ruled by economics, so that almost their entire personal and social life is
permeated with a certain economic way of thinking. They moreover deplore the fact
that at the very time when the development of economic life could mitigate social
inequalities (provided that it be guided and coordinated in a reasonable and human
way), it is often made to embitter them; or, in some places, it even results in a decline
of the social status of the underprivileged and in contempt for the poor. In addition,
While an immense number of people still lack the absolute necessities of life, some,
143
Pope Paul VI (1965), Gaudium et Spes, Vatican, December 7.
61
even in less advanced areas, live in luxury or squander wealth, extravagance and
wretchedness exist side by side (63).
In a reference to corporations, the document argues as follows: Economic

development must remain under mans determination and must not be left to the
judgment of a few men or groups possessing too much economic power or of the
political community alone or of certain more powerful nations. It is necessary, on the
contrary, that at every level the largest possible number of people and, when it is a
question of international relations, all nations have an active share in directing that
development. The notion of growth is not restricted to economics: Citizens should
remember that it is their right and duty, which is also to be recognized by the civil
authority, to contribute to the true progress of their own community according to their
ability. Especially in underdeveloped areas, where all resources must urgently be
employed, those who hold back their unproductive resources or who deprive their
community of the material or spiritual aid that it needssaving the personal right of
migrationgravely endanger the common good (65).
The Council moreover argues that in economic enterprises, it is persons who are
joined together, that is, free and independent human beings created to the image of
God. Therefore, with attention to the functions of eachowners or employers,
management or laborand without doing harm to the necessary unity of management,
the active sharing of all in the administration and profits of these enterprises in ways
to be properly determined is to be promoted (68). The Council is convinced that
Christians can considerably contribute to the fight for justice, the prosperity of
mankind and to the peace of the world (72). In acquiring the absolutely necessary
skill and experience, the Conciliar Father argue that Christians should observe the
right order in their earthly activities in faithfulness to Christ and His Gospel, thus their
whole life, both individual and social, will be permeated with the spirit of the
beatitudes, notably with a spirit of poverty (72).
The Second Vatican Council had a tremendous impact on the local churches. The call
of Conciliar Fathers to thoroughly examine the local socioeconomic and political
issues in the light of the Gospel was overwhelmingly followed. The most widely
publicized local expression was the Latin American Bishops Conference, which took
place in Medelln, Colombia. Another important regional expression, which changed
internal church dynamics, was the one organized by the Dutch Episcopate in
Noordwijkerhout. The Dutch pastoral congress resulted in fifteen thousand discussion
groups and 4,500 workshops. The principal debates at the six plenary sessions, which
were held between 1968 and 1970, got widespread media coverage.
3.1.6. Populorum Progressio (1967)
Not long after the Second Vatican Council, as soon as March 1967, Pope Paul VI
promulgated the encyclical letter Populorum Progressio, which expands on the theme
of development. The pope argues that the progressive development of peoples,
especially those trying to escape the ravages of hunger, poverty, endemic disease and
62
ignorance, is an object of deep interest and concern to the church (1).144 The pope
argues that the church has a special role to play but has no desire to be involved in
the political activities of any nation. Nevertheless, the magisterium affirms that
since the church does dwell among men, she has the duty of scrutinizing the signs of
the times and of interpreting them in the light of the Gospel, sharing the noblest
aspirations of men and suffering when she sees these aspirations not satisfied, she
wishes to help them attain their full realization. This is why the magisterium offers
man her distinctive contribution: a global perspective on man and human realities
(13). The pope directs his appeal to both people who are suffering from material
poverty and moral poverty (21).
In a section often cited by liberation theologians, the magisterium attacks unbridled

liberalism. It argues that certain liberal concepts have insinuated themselves into the
fabric of human society. According to the magisterium, these concepts present
profit as the chief spur to economic progress, free competition as the guiding norm of
economics, and private ownership of the means of production as an absolute right,
having no limits or concomitant social obligations. Such liberalism paves the way
from tyranny, which results in the international imperialism of money (26).
Although critical of liberalism, the magisterium is carefully not to call for
revolutionary uprisings. It argues that they could instill great damage to
fundamental personal rights and dangerous harm to the common good of the country,
engender new injustices, introduce new inequities and bring new disasters (31).
Wealthier nations are called to a threefold obligation: Mutual solidarity the aid
that the richer nations must give to developing nations; social justice the
rectification of trade relations between strong and weak nations; and universal charity
the effort to build a more humane world community, where all can give and receive,
and where the progress of some is not bought at the expense of others (44). The
magisterium moreover argues that the duty of promoting human solidarity directly
falls upon the shoulders of the citizens of nations. It directly calls for public and
private allocations of gifts, loans and investments for underdeveloped countries.
Greater generosity, willing sacrifice and diligent effort from developed countries are
urgently requested. The magisterium asks whether rich nations are prepared to pay
higher taxes so that public authorities may expand their efforts in the work of
development. Also, whether rich countries are prepared to pay more for imported
goods, so that the foreign producer may make a fairer profit. And finally also,
whether citizens of rich countries are prepared to emigrate from his homeland if
necessary and if he is young, in order to help the emerging nations (47). Next, the
magisterium proposes a transfer of wealth from the rich to the poor nations: We must
repeat that the superfluous goods of wealthier nations ought to be placed at the
disposal of poorer nations. It argues that continuing avarice will arouse the
judgment of God and the wrath of the poor, with consequences no one can foresee.
The magisterium refers to the parable of the rich man: The fields yielded an
abundant harvest and he did not know where to store it: but God said to him, fool,
this very night your soul will be demanded from you (49).
In yet another indictment of the liberal world order, the magisterium reiterates that it
is evident that the principle of free trade, by itself, is no longer adequate for regulating
144
Pope Paul VI (1967), Populorum Progressio, Vatican, March 26.
63
international agreements. It deplores the fact that market prices that are freely
agreed upon can turn out to be most unfair, it must be avowed openly that, in this
case, the fundamental tenet of liberalism (as it is called), as the norm for market
dealings, is open to serious question (58). The pope also calls for social
responsibility of corporations, especially from industrialists, merchants, managers
and representatives of large business concerns. The encyclical argues that their
more favored position should rather spur them on to be initiators of social progress
and human betterment in these lands. In addition, their organizational experience
should help them to figure out ways to make intelligent use of the labor of the
indigenous population, to develop skilled workers, to train engineers and other
management men, to foster these peoples initiative and prepare them for offices of
ever greater responsibility (70). Corporations clearly are seen as entities, which
have a vocation to contribute to the advancement of humanity. It is clear that Pope
Paul VIs socalled development encyclical endeavors to incorporate the liberation
theology agenda into the social teaching of the Catholic Church.
3.1.7. Octogesima Adveniens (1971)
In the apostolic letter Octogesima Adveniens, promulgated on the eightieth

anniversary of Rerum Novarum, Pope Paul VI elaborates on the notions first
employed in 1967. The letter is a renewed call for action for social justice, in
response to the new needs of a changing world (1).145
The paragraph that has received most attention throughout the years concerns about
the very role of the magisterium. With respect to the changing socioeconomic and
political situation worldwide, the encyclical argues as follows: In the face of such
widely varying situations it is difficult for us to utter a unified message and to put
forward a solution which has universal validity. The magisterium reiterates that
such is not our ambition, nor is it our mission. The pope argues that it is up to the
Christian communities to analyze with objectivity the situation which is proper to
their own country, to shed on it the light of the Gospels unalterable words and for
action from the social teaching of the church. It moreover argues as follows: It is up
to these Christian communities, with the help of the Holy Spirit, in communion with
the bishops who hold responsibility and in dialogue with other Christian brethren and
all men of goodwill, to discern the options and commitments which are called for in
order to bring about the social, political and economic changes seen in many cases to
be urgently needed. According to the magisterium, the Gospel is never outdated: Its
inspiration, enriched by the living experience of Christian tradition over the centuries,
remains ever new for converting men: end for advancing the life of society (4).
In this apostolic letter, an ecological consciousness is raised. This is rather prophetic

as it came before the Club of Rome published its groundbreaking document Limits of
Growth.146 The magisterium warns that human activity can have devastating
consequences for the natural environment. It laments illconsidered exploitation and
degradation of nature in which mankind risks becoming the victim: Not only is the
145
Pope Paul VI (1971), Octogesima Adveniens, Vatican, May 14.
146
Meadown, Donella (1972), The Limits of Growth: a Report of the Club of Romes Project on the
Predicament of Mankind, New York, Universe.
64
material environment becoming a permanent menace pollution and refuse, new

illness and absolute destructive capacity but the human framework is no longer
under mans control, thus creating an environment for tomorrow which may well be
intolerable (21). In the section Ideologies and human liberty, the magisterium
argues that Christians, who wishes to live his faith in a political activity which he
thinks of as service cannot without contradicting himself adhere to ideological
systems which radically or substantially go against his faith and his concept of man.
Therefore, Christians cannot adhere to the Marxist or liberal ideology. The
magisterium warns against the dangers of atheistic materialism, which is
characterized by its dialectic of violence. The magisterium argues moreover that it
dangerously absorbs individual freedom in the collectivity and denies all
transcendence to man and his personal and collective history (26).
The magisterium is especially keen on warning against the dangerous attractions of

socialists currents, especially those ideologies which are incompatible with faith:
Too often Christians attracted by socialism tend to idealize it in terms which, apart
from anything else, are very general: a will for justice, solidarity and equality.
According to the magisterium, however, They refuse to recognize the limitations of
the historical socialist movements, which remain conditioned by the ideologies from
which they originated.
According to the magisterium, a generous aspiration and seeking for a more just
society should always be compatible with the safeguarding of important values,
especially those of liberty, responsibility and openness to the spiritual. These three
dimensions guarantee the integral development of man (31). The magisterium also
warns against adhering to liberal ideology, because it exalts individual freedom by
with drawing it from every limitation. The liberal ideology is moreover rejected
because it considers social solidarities as more or less automatic consequences of
individual initiatives, not as an aim and a major criterion of the value of the social
organization (26). The magisterium criticizes the liberal ideology, which often
disguises itself in the name of economic efficiency. According to the magisterium,
the very root of philosophical liberalism is an erroneous affirmation of the autonomy
of the individual in his activity, his motivation and the exercise of his liberty (35).
In sum, the magisterium regards economics as a discipline with a radical limitation

because it is often a field of confrontation and domination (46). Pope Paul VI
argues that Christian faith and social morality should oppose both the Marxist and
liberal ideology, as they better safeguard and advance the notions of responsibility
and freedom (27 and 40). The reception of the encyclical has also been positive.
Nevertheless, Gudorf argues that although the essentially innovative nature of the
popes approach to justice seems clear and relatively consistent, we know from
hindsight that the innovative approach of Octogesima Adveniens never took root.
Gudorf argues that the encyclical had a very limited impact on the way that the
official Church acts either internally or externally in the world, and has effectively
become a dead letter in the domain of the hierarchy.147 In general, however, it is
widely regarded that Octogesima Adveniens had an incremental, positive impact on
147
Gudorf, Christine (2004), Octogesima Adveniens, in: Sowle, Lisa & Kenneth Himes (2004),
Modern Catholic Social Teaching: Commentaries and Interpretations, Washington, DC:
Georgetown University Press, p. 330.
65
the church. Throughout the 1970s, many justice and peace groups have proliferated
within dioceses and parishes worldwide, directly dealing with issues raised in the
encyclical such as poverty and violence. The Catholic social lobby became
increasingly influential.
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3.2. The Social Magisterium under Pope John Paul II
With the election of Cardinal Karol Jozef Wojtyla in October 1978 as pope, taking the
name Pope John Paul II, a whole new chapter unfolds in history of social teaching of
the Catholic Church. The election of a Slavic pope would have unexpected
consequences, especially behind the Iron Curtain and Latin America.
3.2.1. Redemptor Hominis (1979)
In March 1979, Pope John Paul II promulgated his first encyclical, in which he
emphasized that Catholic social teaching must in no way be confused with political
community, nor bound to any political system (13).148 The Polish pope laments the
fact that the modern man has alienated himself from Mother Nature:
Why is it that the power given to man from the beginning by which he was to subdue
the earth turns against himself, producing an understandable state of disquiet, of
conscious or unconscious fear and of menace, which in various ways is being
communicated to the whole of the presentday human family and is manifesting itself
under various aspects? The exploitation of the earth demands rational and honest
planning. The pope calls for a stewardship theology, in which man communicates
with nature as an intelligent and noble master and guardian, and not as a heedless
exploiter and destroyer (15).
In reference to economics, the pope calls for a return to the basic questions: Christians
should be driven by being more, not having more. True advancement or progress
consists is being more: Man cannot relinquish himself or the place in the visible
world that belongs to him; he cannot become the slave of things, the slave of
economic systems, the slave of production, the slave of his own products. The
magisterium argues that a civilization purely materialistic condemns man to
slavery (16).
The economic universe is characterized by a consumer attitude uncontrolled by

ethics on one side, and a consumer attitude marked by shortages, which has driven
people to conditions of even worse misery and destitution. According to Pope John
Paul II, this phenomenon is so widespread that it brings into question the fnancial,
monetary, production and commercial mechanisms that, resting on various political
pressures, support the world economy. As the economic ideologies are proving
incapable either of remedying the unjust social situations inherited from the past or of
dealing with the urgent challenges and ethical demands of the present, there is an
urgent need to pay attention to the principle of solidarity. The pope argues that the
structures of economic life is one on which it will not be easy to go forward without
the intervention of a true conversion of mind, will and heart. Economic development,
accordingly, must be constantly programmed and realized within a perspective of
universal joint development of each individual and people. It that is not the case, that
the category of economic progress becomes in isolation a superior category
subordinating the whole of human existence to its partial demands, suffocating man,
148
Pope John Paul II (1979), Redemptor Hominis, Vatican, March 4.
67
breaking up society, and ending by entangling itself in its own tensions and excesses.
The dangers, which are enlisted, are huge: war and destruction, chauvinism,
imperialism, and neocolonialism (16).
3.2.2. Laborem Exercens (1981)
In his third papal encyclical Laborem Exercens, which was promulgated on the
ninetieth anniversary of Rerum Novarum, in September 1981, Pope John Paul II
continued on the many themes of his first encyclical but cast them in a new light.149
The most significant contribution of this specific encyclical is the popes explanation
that human beings are given a superior place in the order of creation: Man is the
image of God partly through the mandate received from his Creator to subdue, to
dominate, the earth. In carrying out this mandate, man, every human being, reflects
the very action of the Creator of the universe. The pope here appeals to the
anthropology implied in the Genesis account of creation. In addition, the pope
emphasizes the following: Work understood as a transitive activity, that is to say an
activity beginning in the human subject and directed towards an external object,
presupposes a specific dominion by man over the earth, and in its turn it confirms
and develops this dominion (4).150 The pope stresses that humankind is called to
develop the earth, which is not a carte blanche to maximize gains at the expense of the
environment. It is through labor and cooperation that humankind can tap the richness
of Gods creation.
The encyclical also warns against various forms of neocapitalism or collectivism

which have compromised worker solidarity and even allowed flagrant injustices
(8). The pope warns for the error of economism, which considers human labor
solely according to its economic purpose. For the magisterium, the material has no
primacy over the spiritual and the personal: A materialism judged capable of
satisfying mans needs, not so much on the grounds of premises derived from
materialist theory, as on the grounds of a particular way of evaluating things, and so
on the grounds of a certain hierarchy of goods based on the greater immediate
attractiveness of what is material (13). The magisterium warns for the dangers of
economism and dialectic materialism because it professes to reduce spiritual reality to
a superfluous phenomenon. Rigid capitalism, which is the position that defends the
exclusive right to private ownership of the means of production as an untouchable
dogma of economic life, equally continues to remain unacceptable (14).
The encyclical also addresses the role of corporations in relation to the labor question.
It argues that corporations, referred to as multinational or transnational, do fix the
highest possible prices for their products, while trying at the same time to fix the
lowest possible prices for raw materials or semimanufactured goods. According to
the magisterium, this is one of the causes of an everincreasing disproportion between
national incomes: The gap between most of the richest countries and the poorest
ones is not diminishing or being stabilized but is increasing more and more, to the
149
The encyclical was originally planned to be promulgated as the ninetieth anniversary of Rerum
Novarum. However, two days before that day the pope suffered an attempt on his life by Mehmet Ali
Agca. The encyclical was therefore published four months later.
150
Pope John Paul II (1981), Laborem Exercens, Vatican, September 14.
68
detriment, obviously, of the poor countries. It deplores the fact that this development
has an effect on local labor policy and on the workers situation in the economically
disadvantaged societies. The encyclicals attacks the direct employer that fixes
working conditions below the objective requirements of the workers, especially if he
himself wishes to obtain the highest possible profits from the business which he runs
or from the businesses which he runs, in the case of a situation of socialized
ownership of the means of production. It calls for the United Nations, the
International Labor Organization and the Food and Agriculture Organization to play a
larger role in achieving full respect for workers rights. Such role is crucial since the
rights of the human person are the key element in the whole of the social moral order
(17).
In sum, Laborem Exercens has turned out to be one of the most beautiful writings on
the subject of work. In an indirect reference of the Solidarity movement in his
homeland, the pope rightly stresses that work should expresses dignity. Economic
activity indeed should center on work, not capital or material gain.
3.2.3. Sollicitudo Rei Socialis (1987)
In his seventh encyclical, promulgated in December 1987, Pope John Paul II presents
a theological investigation of the present world and launches an effort to establish a
fuller and more nuanced concept of development. This encyclical was promulgated
in commemoration of the twentieth anniversary of Populorum Progressio. The pope
is revisiting the aim and inspiration of the development of peoples, as the issues
are still very far from being exhausted (4).151 The issue is moreover revisited
because the configuration of the world in the course of the last twenty years, while
preserving certain fundamental constants, has undergone notable changes and presents
some totally new aspects (4). Sollicitudo Rei Socialis is the most elaborate papal
document on the development of poor nations to date.
The encyclical is the last one still written in a bipolar, antagonistic world, in which the
capitalist West was facing the communist East. It speaks of the West, as a system
which is historically inspired by the principles of the liberal capitalism which
developed with industrialization during the last century. It speaks of the East, as
system inspired by the Marxist collectivism which sprang from an interpretation of
the condition of the proletarian classes made in the light of a particular reading of
history (20). The magisterium deplores the fact that this logic of blocs and their
respective spheres of influence has led to tensions and taken the form of cold war,
sometimes even of wars by proxy. It argues that conflicts in the Northern
Hemisphere, namely between East and West, are an important cause of the
retardation or stagnation of the South (22). The document repeats the statement
made in Populorum Progressio that the resources and investments devoted to arms
production ought to be used to alleviate the misery of impoverished peoples (22).
The widening gap between the more developed one and the less developed one is
one of the reasons why the magisterium adopts a critical attitude towards both liberal
capitalism and Marxist collectivism.
151
Pope John Paul II (1987), Sollicitudo Rei Socialis, Vatican, December 30.
69
In the section Authentic Human Development, the encyclical argues that

development is not a straightforward process, as if it were automatic and in itself
limitless, as though, given certain conditions, the human race were able to progress
rapidly towards an undefined perfection of some kind. The magisterium warns that
the development can not only be interpreted in the light of progress with
philosophical connotations deriving from the Enlightenment, or merely in the
economic and social sense (27). It argues that the economic concept linked to the
word development has entered into crisis: In fact there is a better understanding
today that the mere accumulation of goods and services, even for the benefit of the
majority, is not enough for the realization of human happiness. The encyclical
stresses that development has a moral connection: The experience of recent years
shows that unless all the considerable body of resources and potential at mans
disposal is guided by a moral understanding and by an orientation towards the true
good of the human race, it easily turns against man to oppress him. It moreover
argues warns about the sad effects of blind submission to pure consumerism
(28). In other words, development necessarily has an economic dimension, since it
must supply the greatest possible number of the worlds inhabitants with an
availability of goods essential for them to be, it is not limited to that dimension:
Development which is not only economic must be measured and oriented according
to the reality and vocation of man seen in his totality, namely, according to his interior
dimension (29).
The encyclical refers to the account of Genesis where humankind is placed in the
garden with the duty of cultivating and watching over it, being superior to the other
creatures placed by God under his dominion (Genesis 1:2526). It also emphasizes
Genesis 2:1617, where humankind is reminded that is must remain subject to the will
of God, who imposes limits upon his use and dominion over things. In other words,
humankind is has dominion over the other created beings, and is called to cultivate the
garden, which is to be accomplished within the framework of obedience to the divine
law and therefore with respect for the image received, the image which is the clear
foundation of the power of dominion recognized as belonging to man as the means to
his perfection (30). A stewardship theology takes the center stage.
The pope stresses that the obligation to commit oneself to the development of peoples
is not just an individual duty, and still less an individualistic one, as if it were
possible to achieve this development through the isolated efforts of each individual.
The magisterium emphasizes that it is an imperative which obliges each and every
man and woman, as well as societies and nations (30). Authentic development and
respect for human rights, which are intrinsically connected, reveal the moral character
of development. At the personal level, the magisterium emphasizes the right to life at
every stage of its existence; the rights of the family, as the basic social community, or
cell of society. At the international level, it argues that there must be complete
respect for the identity of each people, with its own historical and cultural
characteristics. It moreover affirms the Charter of the United Nations, where equality
is the basis of the right of all to share in the process of full development (30).
After conducting a social analysis of development, the encyclical provides a

theological reading of modern problems. A theological interpretation is regarded as
70
essential since an analysis limited exclusively to the economic and political causes of
underdevelopment and, mutatis mutandis, of socalled superdevelopment would
be incomplete. The encyclical singles out the moral causes which interfere in such a
way as to slow down the course of development and hinder its full achievement
(35).
The first theological qualification is structures of sin, which is applied to the

situation of the contemporary world. The concept of sin is essential in order to
gain a profound understanding of the reality that confronts (36). The magisterium
warns that individuals, nations and blocs can fall victim to sinful attitudes. Modern
forms of idolatry, including money, ideology, class, and technology are regarded as
modern structures of sin, imperialism, and true nature of evil (37). In a quest
to overcome these perils, the magisterium calls for conversion, which entails a
relationship to God, and the exercise of solidarity, which helps us to see the other
whether a person, people or nationnot just as some kind of instrument, with a work
capacity and physical strength to be exploited at low cost and then discarded when no
longer useful, but as our neighbor, a helper (Genesis 2:1820), to be made a
sharer, on a par with ourselves, in the banquet of life to which all are equally invited
by God (39).
The next section speaks of some particular guidelines in the quest of development.
The magisterium warns that the church does not have technical revolutions to offer
for the problem of underdevelopment as such. Encyclicals are not political programs:
The church does not propose economic and political systems or programs, nor does
she show preference for one or the other, provided that human dignity is properly
respected and promoted, and provided she herself is allowed the room she needs to
exercise her ministry in the world. In other words, the Catholic Church has no
preference for a specific political system as long as human dignity is respected.
According to Pope John Paul II, the Catholic Church is an expert in humanity,
which leads her necessarily to extend her religious mission to the various fields in
which men and women expend their efforts in search of the always relative happiness
which is possible in this world, in line with their dignity as persons.
The magisterium does not defend a third way between liberal capitalism and
Marxist collectivism, nor even a possible alternative to other solutions less radically
opposed to one another: rather, it constitutes a category of its own. Catholic social
teaching is not an ideology, but rather a reflection on the complex realities of human
existence, in society and in the international order, in the light of faith and of the
churchs tradition. The main aim of Catholic social teaching is defined as an
interpretation of realities, determining their conformity with or divergence from the
lines of the Gospel teaching on man and his vocation, a vocation, which is at once
earthly and transcendent. In other words, it is a guide of Christian behavior (41).
For the first time in an encyclical setting, the pope defends the option or love of
preference for the poor, which is defined as a special form of primacy in the
exercise of Christian charity, to which the whole tradition of the church bears
witness. The concept of bearing witness again is emphasized as a prime concern.
Christians are called to embrace the immense multitudes of the hungry, the needy,
the homeless, those without medical care and, above all, those without hope of a
better future (42).
71
The international trade, monetary and financial systems are also condemned as
inadequate. The magisterium criticizes the international division of labor, whereby
the lowcost products of certain countries which lack effective labor laws or which
are too weak to apply them are sold in other parts of the world at considerable profit
for the corporations engaged in this form of production, which knows no frontiers. In
a clear reference to the situation of the late 1980s, characterized by debt defaults, the
magisterium argues that the world monetary and financial system is marked by an
excessive fluctuation of exchange rates and interest rates, to the detriment of the
balance of payments and the debt situation of the poorer countries (42). The
development model backed by the Vatican is one that above all demands a spirit of
initiative on the part of the countries, which need it. Each one is expected to act in
accordance with its own responsibilities, not expecting everything from the more
favored countries. At the same time, the magisterium argues that each must likewise
realize its true needs, as well as the rights and duties which oblige it to respond to
them (42). Integral development starts at home. Despite the rather pessimistic
analysis of the socioeconomic discrepancies in the world, the magisterium argues
that there is no justification for despair or inertia: Though it be with sorrow, it must
be said that just as one may sin through selfishness and the desire for excessive profit
and power, one may also be found wanting with regard to the urgent needs of
multitudes of human beings submerged in conditions of underdevelopment, through
fear, indecision and, basically, through cowardice. The magisterium calls humankind
to face the tremendous challenge of integral development and concludes that a
greater responsibility rests on those who have more and can do more (42). This
appeal is not only directed towards Christians but also to the Jewish people, who
share with us the inheritance of Abraham, as well as to the Muslims, who like us
believe in a just and merciful God, and all the followers of the worlds great
religions (47).
In sum, Sollicitudo Rei Socialis makes several prominent innovations for Catholic
social teaching. First, it defines a personal right of economic initiative. Second,
equally in contrast to Populorum Progressio, it is antisocialist. Whereas Populorum
Progressio still presented a Statecentered approach, this encyclical promotes an
economy based on personal initiatives. In that sense, Pope John Paul II already
softened a more radical interpretation defended by Latin American liberation
theologians. The encyclical sharply underlines the importance of culture as an agent
for social change. Underdevelopment is not a result of bad economics, but also of
insecure civil liberties. The epistemological key of the encyclical is therefore human
dignity.
3.2.4. Redemptoris Missio (1990)
In his eighth encyclical, promulgated in December 1990, Pope John Paul II presents a
theological investigation on the permanent validity of the churchs missionary
mandate.152 The pope argues that throughout the ages, missionary drive has always
been a sign of vitality, just as its lessening is a sign of a crisis of faith (2). In its first
152
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document issued after the collapse of the Iron Curtain, the magisterium recognizes
new opportunities for the church: We have witnessed the collapse of oppressive
ideologies and political systems; the opening of frontiers and the formation of a more
united world due to an increase in communications; the affirmation among peoples of
the gospel values which Jesus made incarnate in his own life (peace, justice,
brotherhood, concern for the needy); and a kind of soulless economic and technical
development which only stimulates the search for the truth about God, about man and
about the meaning of life itself (3). The magisterium warns against gradual
secularization of salvation, as Christianity cannot be reduced to merely human
wisdom, a pseudoscience of well being (11).
In the section New Worlds and New Social Phenomena, the magisterium addresses the
challenges of missiology in the context of underdevelopment. It reiterates that the
church has a special apostolic concern for refugees: The community of believers in
Christ is challenged by these inhuman situations: the proclamation of Christ and the
kingdom of God must become the means for restoring the human dignity of these
people (37). In the section Promoting Development by Forming Consciences, the
magisterium reiterates that the church promotes development through schools,
hospitals, printing presses, universities and experimental farms. It warns, however,
that development does not primarily derive from money, material assistance or
technological means, but from the formation of consciences and the gradual
maturing of ways of thinking and patterns of behavior. Man is placed at the core of
the quest for integral development, not money or technology (58).
The magisterium is not only directing its attention towards integral development
strategies in the developing countries, but also in the developed one. It argues as
follows: The contribution of the church and of evangelization to the development of
peoples concerns not only the struggle against material poverty and
underdevelopment in the South of the world, but also concerns the North, which is
prone to a moral and spiritual poverty caused by overdevelopment. The pope argues
that soulless development cannot suffice for human beings and warns against the
wave of consumerism (59). To reiterate his point, the pope repeats the words said
in his pastoral visit to Brazil: The church all over the world wishes to be the church
of the poor [] she wishes to draw out all the truth contained in the Beatitudes of
Christ, and especially in the first one: Blessed are the poor in spirit (60).
In sum, Redemptoris Missio is a contemporary reminder of the crucial importance of

mission in the church. It outlines the three main challenges of the third millennium.
First, the geographic challenge: the mission of the church is still ad gentes. Second,
the demographic challenges: the church has to face the new realities of megalopolises
or massive urban areas in the underdeveloped countries. In the third place, the cultural
challenge: the pope speaks of facing the modern equivalents of the Areopagus, such
as mass communication, media, human rights and environmental groups. The pope
affirms inculturation, as the best effort to translate Christian truth into different
context.
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3.2.5. Centesimus Annus (1991)
Pope John Paul II promulgated his ninth encyclical only four months later in May
1991, on the hundredth anniversary of Rerum Novarum. The pope invited a
distinguished group of economists to the Vatican to prepare the groundwork for this
encyclical, which explicitly addresses economic issues. Among the economists
invited were Jacques Dreze, the economic theory and econometrics professor of
Universit Catholique de Louvain, Jeffrey Sachs and Amartya Sen of Harvard
University. After the summit, a synthesis to guide the drafting of the encyclical was
elaborated by the Pontifical Council of Justice and Peace.
The main objective of the encyclical is to provide a contemporary analysis on current

problems regarding the development of individuals and peoples (2).153 According to
the magisterium, rereading the Encyclical in the light of contemporary realities
enables us to appreciate the churchs constant concern for and dedication to categories
of people who are especially beloved to the Lord Jesus (11). The chief impetus for
the encyclical was the implosion of the Soviet empire. Pope John Paul II argues that
1989 cannot be understood through the conventional analytic categories of politics.
The Polish pope emphasizes that this transformational year was rather made possible
by a prior moral and cultural revolution, which created the conditions for a nonviolent
overthrow of the communist regimes. Against left or rightwing Realist and
international relations theories, Pope John Paul II emphasizes the precedence of
culture over politics and economics as the engine of historical change. These
assumptions are crucial for a good understanding of the encyclical.
According to the pope, the fundamental error of Real Socialism is anthropological

in nature, as it considers the individual person simply as an element, a molecule
within the social organism, so that the good of the individual is completely
subordinated to the functioning of the socioeconomic mechanism. The pope also
sharply condemns the spiritual void brought about by atheism, which was another
face of socialism: The denial of God deprives the person of his foundation, and
consequently leads to a reorganization of the social order without reference to the
persons dignity and responsibility (13). The magisterium rather backs the principle
of subsidiarity for a more just socioeconomic order. It argues that the principle
creates favorable conditions for the free exercise of economic activity, which will
lead to abundant opportunities for employment and sources of wealth (15). The
principle requires that advanced societies redesign their social policies to return power
to intermediate communities, such as the family and specific networks of
solidarity. These associations develop as real communities of persons and
strengthen the social fabric, preventing society from becoming an anonymous and
impersonal mass, as unfortunately often happens today (49). Besides subsidiarity,
the magisterium calls for the principle of solidarity necessary to defend the weakest.
The pope also reiterates the preferential option for the poor as a special form of
primacy in the exercise of Christian charity (11).
With regard to developing countries, the magisterium remarks that the widespread
process of decolonization has not yet brought integral development to its peoples.
153
Pope John Paul II (1991), Centesimus Annus, Vatican, May 1.
74
Genuine independence is still far away. It also criticizes the role of corporations in
developing countries: Decisive sectors of the economy still remain de facto in the
hands of large foreign corporations which are unwilling to commit themselves to the
longterm development of the host country (20). It calls for a special effort to
mobilize resources, which are not lacking in the world as a whole, for the purpose of
economic growth and common development, redefining the priorities and hierarchies
of values on the basis of which economic and political choices are made (28). The
encyclical warns nevertheless that development must not be understood solely in
economic terms, but in a way that is fully human: The apex of development is the
exercise of the right and duty to seek God, to know him and to live in accordance with
that knowledge (29).
The magisterium praises the modern business economy, because its basis is human
freedom. At the same time, it warns that economic activity is but one sector in a great
variety of human activities, and like every other sector, it includes the right to
freedom, as well as the duty of making responsible use of freedom: Whereas at one
time the decisive factor of production was the land, and later capital understood as a
total complex of the instruments of production today the decisive factor is
increasingly man himself, that is, his knowledge, especially his scientific knowledge,
his capacity for interrelated and compact organization, as well as his ability to
perceive the needs of others and to satisfy them (32). The magisterium clearly
recognizes the benefits of the freemarket economy for developing countries. It
argues that the assumption that developing countries would develop by isolating
themselves from the world market and by depending only on their own resources is no
longer defensible: Recent experience has shown that countries which did this have
suffered stagnation and recession, while the countries which experienced development
were those which succeeded in taking part in the general interrelated economic
activities at the international level. The magisterium argues that it seems therefore
that the chief problem is that of gaining fair access to the international market, based
not on the unilateral principle of the exploitation of the natural resources of these
countries but on the proper use of human resources (33). For John Paul II, the free
market is the most efficient instrument for utilizing resources and effectively
responding to needs (34).
Although the encyclical recognizes the benefits of the freemarket economy, it also
warns against upholding the absolute predominance of capital. It acknowledges the
legitimate role of profit as an indication that a business is functioning well: When a
firm makes a profit, this means that productive factors have been properly employed
and corresponding human needs have been duly satisfied. However, it warns that
profitability is not the only indicator that should be taken into account: It is possible
for the financial accounts to be in order, and yet for the people who make up the
firms most valuable asset to be humiliated and dignity offended. For Pope John
Paul II, the purpose of a business firm is not simply to make a profit, but is to be
found in its very existence as a community of persons who in various ways are
endeavoring to satisfy their basic needs, and who form a particular group at the
service of the whole of society. In other words, profit is a regulator of the life of a
business, but it is not the only one; other human and moral factors must also be
considered which, in the long term, are at least equally important for the life of a
business (35).
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With regard to the rich countries, the encyclical criticizes a culture of consumerism, in
which mankind desires to have and to enjoy rather than to be and to grow. It
concludes that man consumes the resources of the earth and his own life in an
excessive and disordered way (36). Market mechanisms carry the risk of an
idolatry of the market, an idolatry which ignores the existence of goods which by
their nature are not and cannot be mere commodities (40). The pope reiterates the
duty to give from ones abundance, in order to provide what is essential for the life of
a poor person: Given the utter necessity of certain economic conditions and of
political stability, the decision to invest, that is, to offer people an opportunity to make
good use of their own labor, is also determined by an attitude of human sympathy and
trust in Providence, which reveal the human quality of the person making such
decisions (36). The magisterium here again emphasizes that its criticism is directed
not so much against an economic system but rather against an ethical and cultural
system.
Pope John Paul II argues that the most appropriate economic system, even for
underdeveloped countries is a business economy, market economy or free economy.
The pope prefers these terms to capitalism, which often has a different historical
connotation. The ideal economic system is one which recognizes the fundamental
and positive role of business, the market, private property and the resulting
responsibility for the means of production, as well as free human creativity in the
economic sector. The magisterium moreover argues that freedom in the economic
sector should be circumscribed within a strong juridical framework which places it at
the service of human freedom in its totality, and which sees it as a particular aspect of
that freedom, the core of which is ethical and religious (42). The pope refrains from
providing further details on the content of such juridical framework. However, it
seems clear that the pope does not want to impose coercive and arbitrary framework,
but one based on general moral principles.
Yet another new insight presented by the pope in this encyclical concerns the role of
the State in freemarket economies. First, he argues that the State has a right to
intervene when particular monopolies create delays or obstacles to development. It
also defends that the State can exercise a substitute function, when social sectors or
business systems are too weak or are just getting under way, and are not equal to the
task at hand. However, the pope warns about the dangers of the welfare state, which
are wellintentioned but often misconceived: By intervening directly and depriving
society of its responsibility, the Social Assistance State leads to a loss of human
energies and an inordinate increase of public agencies, which are dominated more by
bureaucratic ways of thinking than by concern for serving their clients, and which are
accompanied by an enormous increase in spending. Borrowing from Adam Smiths
principle of unintended consequences, the pope criticizes the role of the welfare state
and invokes the principle of subsidiarity: A community of a higher order should not
interfere in the internal life of a community of a lower order, depriving the latter of its
functions, but rather should support it in case of need and help to coordinate its
activity with the activities of the rest of society, always with a view to the common
good (48). The pope wants to make clear that charity can be ineffective and
counterproductive, when it suffocates the human spirit and diminishes the realm of
responsible action at the personal level.
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At the end of the encyclical, the pope recognizes the challenges posed by
globalization of the economy, which he regards as a phenomenon, which is not to be
dismissed, since it can create unusual opportunities for greater prosperity. The pope
argues that there is a growing feeling, however, that this increasing
internationalization of the economy ought to be accompanied by effective
international agencies which will oversee and direct the economy to the common
good, something that an individual State, even if it were the most powerful on earth,
would not be in a position to do (58).
In sum, Pope John Paul II argues that a freemarket, probusiness economy is

morally acceptable, decisive, and the most desirable system, unless it operates within
a comprehensive framework, which is ethical and religious at its core, and oriented
towards the common good (43). While Centesimus Annus is not an unqualified
endorsement that capitalism is the only model of economic organization, it is an
unequivocal embrace of the core of capitalist theory: private property, the practical
and moral legitimacy of profit, entrepreneurship, limited government and free
exchange in open markets. Libertarianism is rejected as the pope believes that market
forces should be regulated by law and by the public moral culture of society. The
encyclical moreover concludes that culture, not economics, is the engine of history.
The encyclical departs from the socialist perspective in its analysis of poverty.
Poverty is correctly no longer merely reduced to a process of exploitation. Poor
people are poor, mainly because they are marginalized from the benefits of the free
market, probusiness economy. Although poor nations are responsible for their own
plight, advanced societies have a responsibility to include them in the world economy.
The encyclical endorsement of a probusiness, freemarket economy posed a serious

problem for liberation theologians and contributed to a high degree of polarization
within the church. Although the encyclical is mostly a rebuff to the Catholic Left,
most liberation theologians were pleased with the way the magisterium criticized
capitalism. Cldovis Boff, for example, argues that the pope endorsed capitalism,
because he perceives its failings as rather something circumstantial or accidental, not
intrinsic or substantial.154
In return, North American neocon theologians viewed the encyclical as a vindication

of their understanding of Catholic social teaching.155 It cannot be denied that the
entire encyclical has clearly been inspired on the democratic experiment of the United
States of America. The pertinence of many paragraphs to the American situation can
hardly be overestimated. The focus of the encyclical on the morality of
entrepreneurship, the legitimacy of profitmaking and the need for a stable currency,
which are all clear examples of the American model, cannot be downplayed. For the
first time ever, the magisterium seems more inspired by an economic experiment,
which has its roots outside Europe. Neocon theologian Michael Novak praises
Centesimus Annus as everything that many of us had hoped for from some church
authority: capture the spirit and essence of the American experiment in political
154
Boff, Cldovis (1991), A Igreja Militante de Joo Paulo II e o Capitalismo Triunfante: Releitura da
Centesimus Annus a partir do Terceiro Mundo, Revista Eclesistica Brasileira, 204, p. 830.
155
An indepth examination of the origins and viewpoints of the neocons will be presented in the next
chapters.
77
economy. For Novak, if in Vatican II, Rome accepted American ideas of religious
liberty, in Centesimus Annus Rome has assimilated American ideas of economic
liberty. According to Novak, the pope has brought Rome to understand liberty as
Americans do: confirm thy soul in selfcontrol, thy liberty in law.156 Jumping to
such conclusion, however, seems to be based on selective reading as the popes view
on the role of the state and economics is more nuanced than Novak leads his readers
to believe. Although neocon theologians interpret the encyclical as an endorsement of
the American system, British theologian Frank Turner argues that the encyclical reads
more like an endorsement of the policies of the Labor Party: the encyclical
sometimes reads like an unusually wellwritten Labor manifesto.157 This view
seems closer to reality.
The encyclical was not only scrutinized by theologians but also by economists, such
as Milton Friedman. The selfproclaimed nonCatholic, classical liberal argues that
the encyclical is remarkably thoughtful, comprehensive, and finely balanced. He
argues that the encyclical is hedges its bets and has something for almost everyone
except Marxists, Communists, and supporters of abortion. The popes endorsement
of private property, free market and profit will warm the cockles of the classical
liberals heart. In addition, the sharp attack on the welfare state and the strong
defense of the family will appeal to traditional conservatives. He even argues that
the assertion that profitability is not the only indicator of a firms condition will
appeal to the neoconservatives and other believers in corporate social responsibility.
Friedman concludes that there is no discussion of the really hard problems of
reconciling conflicts between equally wellintentioned objectives: The noble spirit,
the good will, that pervade the document offer the perplexed little help in choosing
among alternative means for achieving their objectives, with two notable and
important exceptions: first, the utter rejection of real socialism; second, the strong
endorsement of the longstanding principle of subsidiarity. Friedman also has
problems with the Catholic presuppositions in the encyclical, which argues that
obedience to the truth about God and man is the first condition of freedom (81).
For Friedman, it is not evident whose truth the magisterium is talking about, and by
whom it should be decided: Echoes of the Spanish Inquisition?158
3.2.6. Veritatis Splendor (1993)
Although the tenth encyclical of Pope John Paul II is not directly focusing on
economics and business ethics, it nevertheless presents an indepth analysis of the
anthropological and ethical presuppositions of the churchs moral theory. The
encyclical is a reflection on the whole of the churchs moral teaching, with the
precise goal of recalling certain fundamental truths of Catholic doctrine which, in the
present circumstances, risk being distorted or denied. The encyclical addresses the
doubts and objections, which are present at the psychological, social, cultural,
religious and even properly theological level, with regard to the churchs social
156
National Review (1991), The Pope, Liberty, and Capitalism: Essays on Centesimus Annus, June
24.
157
Turner, Frank (1991), John Paul IIs Social Analysis, The Month, 24, August, p. 347.
158
National Review (1991), The Pope, Liberty, and Capitalism: Essays on Centesimus Annus, June
24.
78
teachings. In short, it argues that the problems of the contemporary world stem from a
crisis of truth. The magisterium intends to intervene in matters of morality, only in
order to exhort consciences and to propose values, in the light of which each
individual will independently make his or her decisions and life choices (4).159
With regard to economics, the magisterium is concerned about the theories that can
gain a certain persuasive force from their affinity to the scientific mentality. It refers
to theories, which are trying to order technical and economic activities on the basis
of a calculation of resources and profits, procedures and their effects. According to
Pope John Paul II, these theories are not grounded in the Catholic moral tradition
because they seek to provide liberation from the constraints of a voluntaristic and
arbitrary morality of obligation which would ultimately be dehumanizing (76).
With regard to morality and the renewal of social and political life, the magisterium
argues that there is a growing reaction of indignation on the part of very many
people whose fundamental human rights have been trampled upon and held in
contempt, as well as an ever more widespread and acute sense of the need for a
radical personal and social renewal capable of ensuring justice, solidarity, honesty and
openness. This situation refers to the serious forms of social and economic injustice
and political corruption affecting entire peoples and nations. For Pope John Paul II,
the root causes of injustice and marginalization are predominantly cultural: As
history and personal experience show, it is not difficult to discover at the bottom of
these situations causes which are properly cultural, linked to particular ways of
looking at man, society and the world. For the pope, at the heart of the issue of
culture we find the moral sense, which is in turn rooted and fulfilled in the religious
sense (98). In this viewpoint, truth and freedom are inseparably connected and
directly related to the socioeconomic and sociopolitical spheres.
The encyclical moreover cites the Catechism of the Catholic Church and affirms that
in economic matters, respect for human dignity requires the practice of the virtue of
temperance, to moderate our attachment to the goods of this world; of the virtue of
justice, to preserve our neighbors rights and to render what is his or her due; and of
solidarity, following the Golden Rule and in keeping with the generosity of the Lord.
It moreover highlights behaviors and actions, which are contrary to human dignity,
such as theft, deliberate retention of goods lent or objects lost, business fraud, unjust
wages, forcing up prices by trading on the ignorance or hardship of another, the
misappropriation and private use of the corporate property of an enterprise, work
badly done, tax fraud, forgery of checks and invoices, excessive expenses, waste, etc.
It also prohibits transgressions of the seventh commandment, which lead to the
enslavement of human beings, disregard for their personal dignity, buying or selling
or exchanging them like merchandise; reducing persons by violence to usevalue or a
source of profit is a sin against their dignity as persons and their fundamental rights
(100). In the final section, the magisterium warns for the risk of an alliance between
democracy and ethical relativism, which would remove any sure moral reference
point from political and social life, and on a deeper level make the acknowledgement
of truth impossible (101). In sum, in every sphere of socialeconomic and political
life, morality should be founded upon truth and authentic freedom. For the pope, this
is the only road towards genuine, integral development.
159
Pope John Paul II (1993), Veritatis Splendor, Vatican, August 6.
79
The encyclical has not always been warmly received within the Catholic Church.
Several German and American theologians, including Norbert Greinacher and Charles
Curran, were critical. The encyclical was perhaps more warmly received in the wider
society, outside the Roman Catholic world. Although it is formally addressed to the
bishops of the Catholic Church and was explicitly intended to set a framework for
authentic moral theology, it was widely read on nonChristian circles. A moral
theology based on the Sermon of the Mount and the Ten Commandments, and a moral
life based on the foundations of freedom and truth nor on corrosive moral relativism
and subjectivism has a wide appeal. It is therefore not surprising that the encyclical
got a lot of attention in Jewish and Protestant circles.
3.2.7. Evangelium Vitae (1995)
The eleventh encyclical of Pope John Paul II is dedicated to the gospel of life. In this
encyclical the pope addresses the roots of the current climate of widespread moral
uncertainty. As this climate affects the global economic order, a closer look at the
popes analysis is warranted. Theologically, the pope qualifies the current climate of
widespread uncertainty in terms of a veritable structure of sin. A socalled
culture of death is actively fostered by powerful cultural, economic and political
currents which encourage an idea of society excessively concerned with efficiency.
This is applicable not only at the personal, family or group level, but also at the
international level (12).160
The pope also theologically qualifies the relationship between developed and
underdeveloped countries as sinful: If we then look at the wider worldwide
perspective, how can we fail to think that the very affirmation of the rights of
individuals and peoples made in distinguished international assemblies is a merely
futile exercise of rhetoric, if we fail to unmask the selfishness of the rich countries
which exclude poorer countries from access to development or make such access
dependent on arbitrary prohibitions against procreation, setting up an opposition
between development and man himself? The encyclical calls for a questioning of the
economic models adopted by States which, also as a result of international pressures
and forms of conditioning, cause and aggravate situations of injustice and violence in
which the life of whole peoples is degraded and trampled upon (18). With regard to
the developed world, the pope laments the culture of materialism, which breeds
individualism, utilitarianism and hedonism: The socalled quality of life is
interpreted primarily or exclusively as economic efficiency, inordinate consumerism,
physical beauty and pleasure, to the neglect of the more profound dimensions
interpersonal, spiritual and religiousof existence (23). The pope calls for a
growing moral conscience and solidarity among peoples to resolve these urgent
matters.
In sum, Evangelium Vitae is a clear indictment of the philosophical nihilism and

culture of indifference, which dominates modern Western societies. It argues that
democracies themselves risk being selfdestructed if moral relativism is not
160
Pope John Paul II (1995), Evangelium Vitae, Vatican, March 25.
80
overcome. The encyclical has been positively received as a document rooted in moral
realism and pastoral compassion.
3.2.8. Compendium of the Social Doctrine (2004)
In addition to the encyclicals, it is also imperative to examine the Compendium of the

Social Doctrine, which was released in October 2004. The Compendium was prepared
following a request by Pope John Paul II, who in the 1999 PostSynodal Apostolic
Exhortation Ecclesia in America had emphasized that it would be very useful to have
a compendium or approved synthesis of Catholic social doctrine [...], which would
show the connection between it and the new evangelization.161
The 500page document has been prepared by the Pontifical Council under the
presidency of the Cardinal FrancoisXavier Nguyen Van Thuan and was first
published in English and Italian. The drafting of the Compendium was a complex
undertaking because it had no historical precedents. In addition, it was difficult to
reach general, universally applicable pastoral guidelines in a globalized economy and
civil society, with unlimited varieties of socioeconomic and political realities.
According to the magisterium, the fundamental questions accompanying the human
journey from the very beginning take on even greater significance in our own day,
because of the enormity of the challenges, the novelty of the situations and the
importance of the decisions facing modern generations. The first challenge facing
humanity today is that of the truth itself of the being who is man or the boundaries
and relation between nature, technology and morality. A second challenge is found in
the understanding and management of pluralism and differences at every level: in
ways of thinking, moral choices, culture, religious affiliation, philosophy of human
and social development. It argues that the third challenge is globalization, the
significance of which is much wider and more profound than simple economic
globalization, since history has witnessed the opening of a new era that concerns
humanity's destiny (16).162
The magisterium, however, urges men and woman to address urgent questions,
including hunger, illiteracy, poverty, marginalization, social discrimination, the
ecological crisis and catastrophic wars (5). The pope argues that Christian love
leads to denunciation, proposals and a commitment to cultural and social projects; it
prompts positive activity that inspires all who sincerely have the good of man at heart
to make their contribution (6). The pope is calling for a greater moral awareness
that will guide the common journey of humanity, which should marvel at the many
innovations of technology. The Compendium should therefore be understood as an
appeal for moral and pastoral discernment and interreligious dialogue. It should also
be understand as a guide to inspire and overview of the Churchs teaching in the area
of social morality.
The Compendium has an introduction followed by three parts. The first part
emphasizes the fundamental presuppositions of social doctrine, including Gods plan
161
Pope John Paul II (1999), Ecclesia in America, Vatican, January 22, paragraph 54.
162
Pope John Paul II (2004), Compendium of the Social Doctrine of the Church, Vatican, October
25.
81
of love for humanity and society, the Churchs mission and social doctrine, the
human person and human rights, and principles of the Churchs social doctrine. In
the second part, the Compendium focuses on traditional familiar themes, such as the
family, human work, economic life, the political community, the international
community, the environment and peace. The third part deals with a wide variety of
recommendations for the use of Catholic social teaching in a pastoral context. The last
part focuses on the underlying purpose of the entire document. In short, the
magisterium intends to offer a contribution of truth to the question of mans place in
nature and in human society.
The seventh chapter of the Compendium, especially paragraphs 323 through 376, is
entirely dedicated to Economic Life. It first reiterates paragraph 41 of the encyclical
Sollicitudo Rei Socialis, by emphasizing that the Catholic Church does not bless or
wholeheartedly endorse any economic system, political party or government
configuration; rather it calls on all people of good will to ensure that economic and
political systems respect the rights of individuals, promote the common good and act
in solidarity with the poorest and weakest citizens of their nation and of the world.
The magisterium reiterates that the universal right to use the goods of the earth is
based on the principle of the universal destination of goods: The right to the common
use of goods is the first principle of the whole ethical and social order and the
characteristic principle of Christian social doctrine (172). This means that property
rights and the right of free trade must be subordinated to the norm of the universal
destination of goods. For the magisterium, property rights and free trade must never
hinder the universal destination of goods, but rather expedite its application.
The original purpose of the norm is considered to be an urgent and social obligation
for all people of good will: The principle of the universal destination of goods is an
invitation to develop an economic vision inspired by moral values that permit people
not to lose sight of the origin or purpose of these goods, so as to bring about a world
of fairness and solidarity, in which the creation of wealth can take on a positive
function. In that sense, wealth, available technological and economic resources and
labor should be used primarily as a means for promoting the wellbeing of all men
and all peoples and for preventing their exclusion and exploitation (174).
The magisterium also applies the norm to the situation of economic

underdevelopment and marginalization. It reiterates that to this end, the preferential
option for the poor should be reaffirmed in all its force. It argues that the option
applies equally to our social responsibilities and hence to our manner of living, and
to the logical decisions to be made concerning the ownership and use of goods
(182).
Next, the Compendium emphasizes that the concept of subsidiarity is among the
most constant and characteristic directives of the Churchs social doctrine. The
concept, which goes back to Quadragesimo Anno, is linked to civil society, which is
understood as the sum of the relationships between individuals and intermediate
social groupings, which are the first relationships to arise and which come about
thanks to the creative subjectivity of the citizen. A network of relationships should
strengthen the social fabric and constitutes the basis of a true community of persons,
making possible the recognition of higher forms of social activity (185). At the
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same time, the Compendium warns that subsidiarity, understood in the positive sense
as economic, institutional or juridical assistance offered to lesser social entities, can
also entail a corresponding series of negative implications that require the State to
refrain from anything that would de facto restrict the existential space of the smaller
essential cells of society. It warns that their initiative, freedom and responsibility
must not be supplanted (186). The principle should protect people from abuses by
higherlevel social authority and calls on these same authorities to help individuals
and intermediate groups to fulfill their duties. The principle is therefore opposed to
certain forms of centralization, bureaucratization, and welfare assistance and to the
unjustified and excessive presence of the State in public mechanisms. Moreover, an
absent or insufficient recognition of private initiative in economic matters also and
the failure to recognize its public function, contribute to the undermining of the
principle of subsidiarity, as monopolies do as well. If the principle of subsidiarity is
to flourish, the Compendium argues that an ever greater appreciation of associations
and intermediate organizations in their fundamental choices and in those that cannot
be delegated to or exercised by others; the encouragement of private initiative so that
every social entity remains at the service of the common good, each with its own
distinctive characteristics; the presence of pluralism in society and due representation
of its vital components; safeguarding human rights and the rights of minorities;
bringing about bureaucratic and administrative decentralization; striking a balance
between the public and private spheres, with the resulting recognition of the social
function of the private sphere; appropriate methods for making citizens more
responsible in actively being a part of the political and social reality of their
country (187).
The Compendium equally stresses the importance of solidarity, as it highlights in a

particular way the intrinsic social nature of the human person, the equality of all in
dignity and rights and the common path of individuals and peoples towards an ever
more committed unity. It launches an appeal for solidarity, arguing that due to the
very rapid expansion in ways and means of communication in real time, for the
first time since the beginning of human history, it is now possible at least
technically to establish relationships between people who are separated by great
distances and are unknown to each other (192). For the magisterium, it is a moral
requirement that the new relationships of interdependence between individuals and
peoples, which are de facto forms of solidarity, have to be transformed into
relationships tending towards genuine ethicalsocial solidarity. Solidarity, therefore,
ought to be seen under two complementary aspects: that of a social principle and that
of a moral virtue (193).
In the section dedicated to economic life, the Compendium first recalls the twofold
attitude towards economic goods and riches, which is found in Old Testament. On one
hand, there is an attitude of appreciation, which sees the availability of material goods
as necessary for life. In the Old Testament, abundance not wealth or luxury is
sometimes seen as a blessing from God. The Compendium refers to the Books of
Wisdom, where poverty is described as a negative consequence of idleness and of a
lack of industriousness, but also as a natural fact. On the other hand, the
Compendium reiterates that economic goods and riches are not in themselves
condemned so much as their misuse. It refers to the prophetic tradition, which often
condemns fraud, usury, exploitation and gross injustice, especially when directed
83
against the poor (323). For the magisterium, economic activity is to be considered
and undertaken as a grateful response to the vocation which God holds out for each
person. In a reference to Genesis, it emphasizes that man is placed in the garden to
till and keep it, making use of it within well specified limits with a commitment to
perfecting it (326). In other words, economic activity and material progress must be
placed at the service of man and society, not the other way around.
The economy or economic life has clearly a moral connotation: The relation between
morality and economics is necessary, indeed intrinsic: economic activity and moral
behavior are intimately joined one to the other. The Compendium argues that the
purpose of the economy is not found in the economy itself, but rather in its being
destined to humanity and society. For the magisterium, the economy or economic
life is not an end in itself: The economy, in fact, whether on a scientific or practical
level, has not been entrusted with the purpose of fulfilling man or of bringing about
proper human coexistence. Its task, rather, is partial: the production, distribution and
consumption of material goods and services (331). This assumption leads
automatically to the conclusion that it is morally imperative that economic life is
geared towards economic efficiency and the promotion of human development in
solidarity. For the magisterium, these are not two separate or alternative aims but one
indivisible goal. In other words, economic life should be morally inspired by justice
and solidarity. Economic growth should never be reached at the expense of human
beings, entire populations or social groups, condemning them to indigence. The
growth of wealth should equally be distributed among populations. The Compendium
wants to fight the structures of sin, which perpetuate poverty, underdevelopment
and degradation (332).
The Compendium also reflects on the preferred economic system to establish a just
society. It repeats its call made in Centesimus Annus, supporting a system which
recognizes the fundamental and positive role of business, the market, private
property and the resulting responsibility for the means of production, as well as free
human creativity in the economic sector. Its calls such system either a business
economy, market economy or simply free economy. It again reiterates that such
system should be circumscribed within a strong juridical framework which places it
at the service of human freedom in its totality, and which sees it as a particular aspect
of that freedom, the core of which is ethical and religious (335). With regards to
business, the Compendium argues that it should be characterized by their capacity to
serve the common good of society through the production of useful goods and
services. It stresses that wealth should be created for all of society, not for a
privileged few. Business has not only an economic function but also a social one:
creating opportunities for meeting, cooperating and the enhancement of the abilities
of the people involved. For the magisterium, the economic dimension of the business
enterprise is a condition for attaining not only economic goals, but also social and
moral goals, which are all pursued together (338). There remains no doubt that the
authentic values for concrete development of the person cannot be neglected. The
Compendium follows the encyclical letter Laborem Exercens, published 23 years
earlier, in which the pope reiterates that there should always be recognition of the
primacy of the whole person over simple material wellbeing and of the common
good over individual interest.
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The Compendium dedicates three entire paragraphs to profit. It reiterates Centesimus

Annus, which recognized the proper role of profit as the first indicator that a business
is functioning well. It repeats also the warning stated in the same encyclical that
financial accounts might be in good order, whereas its employees are humiliated and
dignity. The Compendium argues that it is essential that within a business the
legitimate pursuit of profit should be in harmony with the irrenounceable protection of
the dignity of the people who work at different levels in the same company (340).
The Compendium also repeats the words uttered in the Catechism of the Catholic
Church, in which practices of usury are morally condemned: Those whose usurious
and avaricious dealings lead to the hunger and death of their brethren in the human
family indirectly commit homicide, which is imputable to them. The Compendium
extends this condemnation to international economic relations, especially with regard
to the situation in lessadvanced countries, which must never be made to suffer
abusive if not usurious financial systems (341).
Next, the Compendium argues that economic initiative is an expression of human

intelligence and of the necessity of responding to human needs in a creative and
cooperative fashion. It underlines that creativity and cooperation are signs of the
authentic concept of business competition. According to the magisterium, this can
best be established through a cumpetere, that is, a seeking together of the most
appropriate solutions for responding in the best way to needs as they emerge (343).
This concept of competition is hereby explicitly introduced in the social teaching to
the Catholic Church. The concept is clearly inspired on the American economic
model, where a sense of individual responsibility and personal economic initiative are
considered as the highest virtues. In yet another direct reference to Centesimus Annus,
the magisterium argues that the free market is the most efficient instrument for
utilizing resources and effectively responding to needs. It moreover argues that a
truly competitive market is an effective instrument for attaining important objectives
of justice: moderating the excessive profits of individual businesses, responding to
consumers demands, bringing about a more efficient use and conservation of
resources, rewarding entrepreneurship and innovation, making information available
so that it is really possible to compare and purchase products in an atmosphere of
healthy competition (347). At the same time, it warns that the individual profit of an
economic enterprise, although legitimate, must never become the sole objective. In
order to avoid alienation, the free market should always function in service to the
common good and to integral human development (348).
Inspired on Latin American theological writings, the magisterium also warns against
the risk of market idolatry. The Compendium warns that the market has its limits.
Such limits are easily seen in its proven inability to satisfy important human needs,
which require goods that by their nature are not and cannot be mere commodities,
goods that cannot be bought and sold according to the rule of the exchange of
equivalents and the logic of contracts, which are typical of the market. The
magisterium warns that such interpretation of the market is based on a reductionist
vision of the person and society (349).
After issuing a warning concerning the dangers of naked market mechanisms, the
Compendium reiterates the crucial role of the State in economic life. Nevertheless, it
warns immediately that solidarity without subsidiarity, in fact, can easily degenerate
85
into a Welfare State, while subsidiarity without solidarity runs the risk of
encouraging forms of selfcentered localism (351). This statement is clearly
inspired by neoconservative North American theologians and does not find much
support in the rest of the world. The statement clearly belittles the social achievements
in Western European societies. The statement also grossly downplays the tremendous
efforts made by lessdeveloped nations to organize a reasonable social welfare
system. What particularly disquiets Verstraeten is the fact that on the level of a
universal text (encyclical), the social assistance state is criticized without any nuance
or adequate definition and without paying attention to its historical background and
real context. Verstraeten therefore questions whether the radical rejection, combined
with a plea for voluntary work, is not too much grain on the mill of neoliberals who
absolutely want to avoid any sort of state intervention.163 The Compendium
concludes however that the fundamental task of the State in economic matters is that
of determining an appropriate juridical framework for regulating economic affairs, in
order to safeguard the prerequisites of a free economy, which presumes a certain
equality between the parties, such that one party would not be so powerful as
practically to reduce the other to subservience (352). The magisterium correctly
concludes that it is necessary for the market and the State to act in concert, one with
the other, and to complement each other mutually (353).
The final section of the economics chapter concentrates on res novae, the socalled
new things typical of the modern age. It first warns of the opportunities and risks of
the complex phenomenon of economic and financial globalization, realizing that the
role of financial markets is becoming ever more decisive and central (361). It
argues that for the Churchs social doctrine, the economy is only one aspect and one
dimension of the whole of human activity: If economic life is absolutized, if the
production and consumption of goods become the centre of social life and society's
only value, not subject to any other value, the reason is to be found not so much in the
economic system itself as in the fact that the entire sociocultural system, by ignoring
the ethical and religious dimension, has been weakened, and ends up limiting itself to
the production of goods and services alone (375). According to the magisterium,
the full development of human society eventually depends on its ethical and religious
character. In other words, the urgent problems of modern economic life are not
directly related to any particular economy system or the freemarket system per se,
but rather related to the dramatic weakening of the ethical and religious dimension.
This is especially true for the problem of consumerism. It is often true that the more
people attach themselves to material gain, the more they detach themselves from God.
In summary, the Compendium reinforces the line of argument first used in Centesimus
Annus that a freemarket, probusiness economy is morally acceptable and even
desirable, as long as it operates within a comprehensive legal framework, which is
ethical and religious at its core. By introducing the concept of cumpetere, it not only
reinforces but also strengthens the case for a freemarket, probusiness economic
system. By providing moral underpinnings for an economic system based on
subsidiarity, solidarity and dignity at the service of humanity, the Compendium should
be regarded as a pedagogical treasure of modern CST. Worldwide, local churches are
163
Verstraeten, Johan (2006), A Ringing Endorsement of Capitalism? The Influence of the Neoliberal
Agenda on Official Social Teaching and its Implications for Justice, Louvain: Catholic University of
Louvain, p. 6.
86
invited and challenged to adopt and translate these universal guidelines into practical
pastoral activities.
87
3.3. The Social Magisterium under Pope Benedict XVI
Pope John Paul II died in April 2005 and was succeeded by the German Cardinal
Joseph Alois Ratzinger. During his prior role as prefect of the Congregation for the
Doctrine of the Faith, his theological ideas have been wellknown and widely
debated. Before becoming the 265th pope, Cardinal Ratzinger has never been an
outspoken supporter of the freemarket economy. Although economics and business
ethics have never been at the center of his writings, a few remarks stand out and are
relevant for this study.
3.3.1. Cardinal Ratzinger on Church and Economy
At a symposium held in Rome in 1985, the thenPrefect of the Congregation

expressed his views on economics, especially the cultural, moral and philosophical
assumptions of the freemarket economy.164 Ratzinger stressed the superior wealth
creating capabilities of the freemarket. However, he warns for deterministic and
utilitarian tendencies, which often underlie philosophical market presuppositions. The
market should not be understood as ideal exchange place in itself capable of providing
sufficient moral validity. It is a grave error, in Ratzingers view, to substitute
authentic Catholic morality for freemarket ideology.
Following the guidelines of the Second Vatican Council, Ratzinger warns that the
autonomy of the economic realm should not be respected above all. He attacks Adam
Smith, whose position holds that the market is incompatible with ethics because
voluntary moral actions contradict market rules and drive the moralizing
entrepreneur out of the game. According to Ratzinger, business ethics rang like
hollow metal because the economy was held to work on efficiency and not on
morality. Instead, the Cardinal argues that the markets inner logic should free us
precisely from the necessity of having to depend on the morality of its participants:
the true play of market laws best guarantees progress and even distributive justice.
Ratzinger denounces a liberal conception of economics as in fact deterministic in its

core: It presupposes that the free play of market forces can operate in one direction
only, given the constitution of man and the world, namely, toward the selfregulation
of supply and demand, and toward economic efficiency and progress. His critique is
not restricted to the determinism but also to the natural laws of the market. The
presupposition of the natural law is that the market in itself is in essence good and
necessarily works for the good. Ratzinger argues that these two presuppositions are
not entirely false, as the successes of the market economy illustrate. Ratzinger
follows Koslowskis argument and underlies that neither are universally applicable
nor correct, as is evident in the problems of todays world economy.165 According to
164
Ratzinger, Joseph (1986), Church and Economy: Responsibility for the Future of the World
Economy, Communio, 13, pp. 199204.
165
Ratzinger follows the arguments employed by Peter Koslowski. See Koslowski, Peter (1985), ber
Notwendigkeit und Mglichkeit einer Wirtschaftsethik, Jahresschrift fr skeptisches Denken, 15, pp.
204305; See also: Koslowski, Peter (1985), Die religise Dimension der Gesellschaft, Religion und
ihre Theorien, Tbingen: Mohr..
88
Ratzinger, the development of the spiritual powers is essential in the development of

the world community: these spiritual powers are themselves a factor in the economy:
the market rules function only when a moral consensus exists and sustains them. At
the same symposium, Ratzinger underlines the failures and counterproductive effects
of development aid, as advocated until then by Western agencies. According to the
Cardinal, new strategies have to be elaborated if the poor nations want to overcome
material misery. According to Gregg, Ratzinger was in the 1980s one of that
relatively small number of intellectuals (secular or religious) who were willing to
question the redistributionist orthodoxy that reigned in many political, government
and church circles.166
In the final section, Ratzinger criticizes the Marxist economic system, which too, is
deterministic in nature. Ratzinger believes that it is a fundamental error to suppose
that a centralized economic system is a moral system in contrast to the mechanistic
system of the market economy. In short, he both attacks the determinism present in
the liberal and Marxist models of economy. He also strongly attacks both ideologies
as they are characterized by a renunciation of ethics as an independent entity relevant
to the economy. Ratzinger here puts emphasis on the culturalmoral dimension of
economics. He believes that the biggest challenge lies in overcoming the separation of
the subjective and objectives realms of economy and church. Christians are
challenged to engage themselves in economic affairs. Christianity is not a private
affair. The laws of the market should not exclusively govern economics. In other
words, the church and the economy are not mutually exclusive, instead, they should
preserve their integrity and yet inseparable. According to Ratzinger, the success of an
economic system depends on its ethical basis, which in turn can be born and
sustained only by strong religious convictions.167
Cardinal Ratzinger further elaborates on his thesis in Truth and Tolerance, which was
first published in 2003. In this brilliant book, the cardinal argues that National
Socialism was the greatest system of slavery in modern history. Along the same
lines as in his 1986 essay, he warns that the moral superiority of the liberal system
arouses no enthusiasm. The reasons are plenty: The number of those who have no
share in the fruits of this freedom is too great those, indeed, who lose every kind of
freedom: being out of work has once more become a mass phenomenon; the feeling of
not being needed, of being superfluous, torments people no less than material
poverty. Moreover, he argues that unscrupulous exploitation is becoming
widespread; organized crime is making use of the opportunities of the free world; and
in the midst of it all the ghost of meaninglessness is wandering around.168
166
Simmons, Gregg (2005), Morality, Economics and the Market in the Thought of Benedict XVI,
London: Institute of Economic Affairs, p. 53.
167
Ratzinger, Joseph (1986), Church and Economy: Responsibility for the Future of the World
Economy, Communio, p. 204.
168
Ratzinger, Joseph (2004), Truth and Tolerance: Christian Belief and World Religions, San
Francisco: Ignatius Press, p. 233234.
89
3.3.1. Deus Caritas Est (2005)
Pope Benedict XVIs first encyclical, promulgated in December 2005, is a relatively

short 16,000word treatise to the whole Catholic Church on the connection between
the love between a man and a woman, divine love and Christian charity. The
encyclical is based on the assumptions that God is Love and underlies the
continuity of the writings of Pope John Paul II.169
The second half of the encyclical is relevant from a business ethics perspective, as it
outlines the Vaticans rationale for weighing in on political issues. First, the German
pope tackles the ageold question whether the church should get involved in
charitable activities only, or also in justice. Leftwing activists often claim that
poor people are only served by justice. In an effort to more accurately define the
relationship between the necessary commitment to justice and the ministry of charity,
the pope concludes that works of charity almsgiving are in effect a way for the
rich to shirk their obligation to work for justice and a means of soothing their
consciences, while preserving their own status and robbing the poor of their rights.
He adds that Christians are also called to build a just social order in which all receive
their share of the worlds goods and no longer have to depend on charity (26).
Meanwhile, he warns that the pursuit of justice cannot be based on a mistaken
premise.
The pope moreover argues that the just ordering of society and the State is a primarily
a responsibility of politics. In return, the State should not impose religion, yet it must
guarantee religious freedom and harmony between the followers of different
religions. The church should act independently and be structured on the basis of her
faith as a community which the State must recognize. According to the
magisterium, these two spheres are qualitatively distinct, yet always interrelated. Faith
is needed in politics in order to avoid the danger of an ethical blindness caused by
the dazzling effect of power and special interests. In other words, faith liberates
reason from its blind spots and therefore helps it to be ever more fully itself; faith
enables reason to do its work more effectively and to see its proper object more
clearly. According to the magisterium, this is exactly where Catholic social teaching
has its place in the political spectrum. It is the role of the church to help form
consciences in political life and to stimulate greater insight into the authentic
requirements of justice as well as greater readiness to act accordingly, even when this
might involve conflict with situations of personal interest (28). Saint Pauls hymn
to charity in the First Letter to the Corinthians, is the Magna Carta of all ecclesial
service (34).
The lay faithful are encouraged to get involved in the churchs charitable
organization, as a direct duty to work for a just ordering of society. The churchs
charitable organizations constitute an opus proprium, a task agreeable to her, in
which she does not cooperate collaterally, but acts as a subject with direct
responsibility, doing what corresponds to her nature (29). The lay faithful,
especially young people, receive a solid formation in solidarity by directly getting
169
Pope Benedict XVI (2005), Deus Caritas Est, Vatican, December 25.
90
involved in humanitarian organizations and philanthropic charities. Francis of Assisi,

Ignatius of Loyola and Teresa of Calcutta stand out as lasting models of social charity
(40). The pope warns that Christian charitable activity must be independent of
parties and ideologies: It is not a means of changing the world ideologically, and it is
not at the service of worldly stratagems, but it is a way of making present here and
now the love which man always needs. The Marxist definition of charity, which
downplays the role of charity as merely preserving the status quo of the rich, is
rejected. Marxist strategy is rejected as an inhuman philosophy, in which people of
the present are sacrificed to the Moloch of the future a future whose effective
realization is at best doubtful (31).
The magisterium carefully argues that the church cannot and must not take upon
herself the political battle to bring about the most just society possible: The church is
dutybound to offer, through the purification of reason and through ethical formation,
her own specific contribution towards understanding the requirements of justice and
achieving them politically (28). At the same time, the church cannot merely sit on
the sidelines but should primarily be involved in the reawakening of the spiritual
energy, without which justice is empty. In sum, the encyclical emphasizes the
intimate connection between love as expressed in kerygmamartyria (proclaiming the
word of God), leitourgia (celebrating the sacraments), and diakonia (exercising the
ministry of charity). These threefold responsibilities are an integral part of the
mission of the church in society (25).
In sum, Pope Benedict XVI first encyclical suggests that he embraces the nuanced
approach to economics and business ethics as employed by his predecessor Pope John
Paul II. The German pope is expected to follow the philosophical mindset of the
Polish pope, which was characterized by a rejection of Marxist categories of
economic analysis, but also by rebuffing glorification of the freemarket economy.
His teachings on economics begin with a philosophical anthropology, which
recognizes in the human quest for transcendent truth and love the defining
characteristic of humanity.
According to Pope Benedict XVI, business ethics should be regarded as a new

opening of conscience. His view on business ethics should therefore be placed in the
same context as his remarks on relativism and truth. Twentyfour hours before
Cardinal Ratzinger became Pope Benedict XVI, he laid out what he sees as the central
challenge facing the church in the 21st century: a dictatorship of relativism, meaning
the rejection of objective truth. In the same line as his predecessor, the German pope
is equally concerned that Catholicism does not assimilate to the widespread secular
mentality or relativism.170 The pope also reiterated a campaign towards true integral
humanism in the annual message for the 2007 World Day of Peace. The common
thread is respect for the natural moral law, as opposed to an insidious relativistic
conception of rights, which can lead to weakening or abandoning those rights,
therefore making violence and the scourge of terrorism possible. According to the
pope, the real clash at the outset of the third millennium is not between the West and
170
Pope Benedict XVI (2006), Christianity and the Crisis of Cultures, New York: Ignatius Press.
The book was presented at a United Nations conference on November 20, 2006. The conference was
cosponsored by Ignatius Press, Edizioni Cantagalli, the Path to Peace Foundation, and the Sublacense
Life and Family Foundation.
91
Islam, but between truth and relativism, between belief and skepticism. As
emphasized in his notorious but enlightening Regensburg address, reason and faith
need one another, because reason without faith becomes nihilism, while faith without
reason becomes extremism. It is well possible that Pope Benedict XVIs Regensburg
speech further down the historic road will be interpreted as having provided the
impetus for cataclysmic changes.
92
4. Business Ethics in Contemporary Contextual Theologies
After having outlined the contributions of the social magisterium to the business
ethics debate, it is now imperative to focus on some contemporary contextual
theologies. The focus will be on Latin American liberation theology and North
American neocon theology. Both enjoy a powerful presence, not only in theology and
church but also in society at large. These widely diverging contextual theologies
deserve scrutiny as both have successfully managed to bring the theological debate to
the wider public demain.
4.1. Latin American Liberation Theology
The first contextual moral theology to be scrutinized comes from Latin America. A
highly influential theology in both the church and society in the last many decades is
the socalled liberation theology. This school of thought deserves special attention
because its writings concerning business ethics and economics have had an impact,
which are going way beyond the confinements of monasteries, seminary classrooms,
or theological journals.
The theological and pastoral movement known as liberation theology was born in
Latin America and then spread to other countries in Africa and Asia. It also made
major inroads into Western Europe and North America.171 Liberation theology has
had a major impact not only on church policies but also on political agendas. From the
1970s onwards, its theories have been followed by many priests, sociologists and
political scientists. At the height of its influence in the 1980s, it even brought the
military and government officials into the debate. In the Cold War, liberation theology
was considered suspicious by North American government officials. The Committee
of Santa F, a policy thinktank close to President Ronald Reagan advised in 1980
that US policy must begin to counter (not react against) liberation theology as it is
utilized in Latin America by the liberation theology clergy.172 In an executive
research project of the US Armed Forces, Lieutenant Colonel Wilson questioned why
atheistic communist movements and liberation theology movements in Latin
America could collaborate on the same goals. The US Armed Forces took the rise of
liberation theology as a serious threat and pondered how should the response be by
US policy makers in the face of such philosophies couched in religious terms.173
Liberation theology has unquestionably not been the passing cult some analysts
thought it would be when it first emerged in the late 1960s. As will be examined in
detail, controversies surrounding liberation theology have provoked the Vatican and
involved sociologists, economists and politicians into the debate. In the next sections,
171
Only at universities in the United Stated and Canada, for example, more than 600 dissertations on
liberation theology have been completed.
172
Linden, Ian (1997), Liberation Theology: Coming of Age, London: Catholic Institute for
International Relations, p. 4.
173
Wilson, James (1993), Liberation Theology: Is There a Future for It? Fort McNair, Washington
DC: The Industrial College of Armed Forces, p. 2. The lieutenant colonel argues that while the United
States attempted to contain the spread of communism, liberation theology joined with Marxists in
efforts to expand communist influence.
93
this study will examine its origins, methodology and highlight three liberation
theologians, who have explicitly focused on economic questions.
4.1.1. The Coming of Age of Liberation Theology
Liberation theologys historical roots are to be found in the prophetic tradition of

evangelists and missionaries from the earliest colonial days in Latin America. Early
preaches to the New World, such as the Dominican priests Bartolom de las Casas
(14841566) and Antonio de Montesinos (14801540), and Jesuit Antonio Vieira
(16081697), exposed the oppression of the indigenous, fought against the slave trade
and called for the abolition of slavery.174
Modern day Latin American liberation theologians inspired their initial writings on
those missionaries but also on European theologians. German theologians like
Dietrich Bonhoeffer (19061945), Jrgen Moltmann (1926), and Johannes Baptist
Metz (1928) have been crucial. For example, Bonhoeffer was the first European
theologian who systematically argued that the church should more deeply appreciate
the view from below. His theology emphasizes human responsibility toward others,
especially the poor and marginalized. Moltmann warned that the church should not
primarily focus on private visions of personal salvation. He argued that the coming
kingdom should provide the church with a societytransforming vision of reality.
Metz, in addition, emphasized that the church has to be understood as an institution of
social criticism. In other words, he argued that the political dimension to faith is core
to the Christian message.
Latin liberation theologians initially argued that these theologies were still too
Eurocentric and abstract in their analysis, neutral in their ideological perspective, and
therefore neglecting the situation of oppression and misery as faced by people in the
South. The European viewpoints had therefore to be translated into the Latin
American context. Whereas the interlocutors of European and NorthAmerican
theologies are atheists and scientists, the interlocutors of liberation theology are the
nonpersons, the impoverished, the excluded, the marginalized. The most powerful
message in the early days, widely defended by liberation theologians, was the
argument that theology has to be radically reinterpreted with a strong bias toward the
poor. Theology as a reinterpretation of the social reality, further interpreted as a
language of integral liberation. Liberation theologys methodology therefore
interprets theological themes from the hermeneutic perspective of the materially poor
and their historical praxis of socioeconomic liberation.
Liberation theologys seejudgeact methodology was furthermore derived from

Joseph Cardijn (18821967) pastoral outreach and the pedagogy of the oppressed of
174
Bartolom de las Casas was the first bishop of Chiapas, Mexico. He became the first outspoken
critic of the Spanish conquest of the Americas, by sending various petitions on behalf of the indigenous
population to Madrid and Rome. The Dominican friar Antonio de Montesinos denounced the role of
the colonizers during Advent in 1511: Tell me, by what right or justice do you hold these Indians in
such a cruel and horrible servitude? in: Sanderlin, George (1992), Witness: Writings of Bartolom de
las Casas, Maryknoll, New York: Orbis, p. 67.
94
Paulo Freire (19211977).175 Conceived in the 1960s, liberation theology became a

movement in the 1970s appealing to the ethical conscience of Christians with
commitment for the integral liberation of person and society. Archbishop Helder
Camara (19091999) of Brazils Recife argued for example that Christian scholars
should do with Karl Marx what St. Thomas Aquinas in his day did with Aristotle,
where seen with suspicion.176 Crucial to the development of liberation theology has
also been the deliberation of the General Conference of Latin American and
Caribbean Bishops (CELAM). An overview of its continental assemblies is therefore
deemed essential to fully understand the reach and impact of liberation theology. The
CELAM documents provide insights in how liberation theology rose in the 1960s and
eventually lost its influence in the 1990s.
4.1.2. The Role of the CELAM
Liberation theology emerged right after the Second Vatican Council, initially
representing a quest to interpret the outcome of Vatican Council in the local contexts
of the developing countries.177 The spirit of aggiornamento of the Second Vatican
Council had set the tone for Latin American Bishops Conference in Medelln.
4.1.2.1. Medelln (1968)
CELAMs Second General Conference took place in Medelln, in August 1968.178 It

replaced the New Christendom model of the Roman Catholic Church. This
ecclesiological model, which dominated Latin America until the 1960s, envisioned
the church as an apolitical custodian of moral values and argued that political affairs
had to be dealt with only in the context of the state.179 Medelln changed this position
considerably by setting the tone for liberation theology. Although the main objective
of the conference was to implement the findings of the Second Vatican Council into
the Latin American pastoral context, it is mostly remembered for its appeal of
Christian resistance to the capitalist order.
175
The Belgian Father Joseph Cardijn elaborated the socalled Jocist method in the early 20th century
as part of his pastoral counseling to young workers. Jocist is a French acronym for Jeunesse Ouvrire
Chretienne or Young Christian Workers.
176
Camara, Dom Helder (1978), What Would St Thomas Aquinas, the Aristotle Commentator, Do If
Faced With Karl Marx? Journal of Religion, 58, Supplement.
177
The doctoral thesis of Rubem Alves is considered as the first major writing of Liberation Theology.
See: Alves, Rubem (1969), Theology of Human Hope, Washington, D.C.: Corpus. Hugo Assmanns
Teologa desde la praxis de la liberacin. Ensayo teolgico desde la Amrica dependiente also
deserves merit as a groundbreaking work. It was first presented in 1969 and published in 1973 in
Salamanca by Sgueme.
178
The First General Conference of the CELAM, which took place in Rio de Janeiro in July 1955, was
uneventful.
179
The apolitical New Christendom model of church was found in the works of Jacques Maritain. This
French Catholic lay philosopher had traveled to Latin America just before the Second World War,
where he proclaimed his visions of an integral humanism in the relationship between state and church.
According to this perception, the State had to deal with the temporal order of existence, whereas the
church had to operate in the spiritual order of existence.
95
Medelln took place in a politically turbulent period of time. Systematic state

oppression and brutally repressive orders were established by means of military coups
in Brazil (1964) and Peru (1968), and were about to occur in Bolivia (1971), Chile
(1973), Uruguay, (1973), and Argentina (1976). The repressive regimes set the tone of
the conference. Leftwing political leaders were persecuted and exiled. At the
economic level, debates focused on new concepts, such as developmentalism, import
substitution industrialization, and transnationalization of production. The dependency
model took the centerstage at the academic level and had serious repercussions at the
Bishops conference. This sociological model posits that the cause of the poverty in
economically lessdeveloped countries is directly related to their reliance and
dependence on economically developed countries. It moreover argues that the
imbalances between rich and poor in Latin America are analogous to the class
struggle, as described by Marx between the proletariat and the bourgeoisie.
The Conclusions of the Medelln conference have sixteen sections.180 The section on
justice, peace, and poverty was mostly appropriated by liberation theologians. The
opening section of the document on poverty set the tone for the other sections: The
Latin American bishops cannot remain indifferent in the face of the tremendous social
injustices existent in Latin America, which keep the majority of our people in dismal
poverty, which in many cases becomes inhuman wretchedness. A deafening cry pours
from the throats of million of men, asking their pastors for a liberation that reaches
them from nowhere else.181 The epistemological keys were no longer development or
reform, but revolution and liberation. According to Dorr, in Latin America the world
development was irretrievably associated with a model of economic growth that
widened the gap between rich and poor [...] in other parts of the South especially
in the newly independent countries of Africa development was still a positive
word.182 The expression liberation through development therefore reflects the
compromise reached at the Synod.
The socioeconomic and political situation in Latin America is sharply denounced and
characterized by institutional violence, unjust structures, internal colonialism,
external colonialism. According to the CELAM, the alternative is to work for
integral human development and liberation. Such ambitious goal requires all
embracing, courageous, urgent, and profoundly renovating transformations and
conscientization. The radical rhetoric employed by the bishops sharply departs from
traditional vocabulary. Integral liberation arises from the recognition that salvation is
not something purely otherworldly and spiritual. For liberation theologians, the
salvation includes a radical liberation from economic exploitation and political
alienation.
The impact of the Latin American interpretation of the Second Vatican Council is
hard to overstate. The Declaration of Medelln sent shockwaves through the church,
180
According to the magisterium, the results of such General Conferences are binding pastorally but
not judicially. Final Documents derive their authority from the fact that they represent local creative
reflections of a particular church.
181
CELAM (1970), The Church in the PresentDay Transformation of Latin America in the Light of
the Council, sections 12; in: Hennelly, Alfred (1992), Liberation Theology: a Documentary
History, Maryknoll, New York: Orbis, pp. 114119.
182
Dorr, Donald (1983), Option for the Poor: A Hundred Years of Vatican Social Teaching,
Maryknoll, New York: Orbis, p. 231.
96
not only in Latin America but also around the world, as it revitalized the revolutionary
spirit within the church. Some bishops present at the Synod already voiced concerns
that the notion of liberation is too closely linked or associated to Marxism and
therefore ought not to be endorsed. The conservative reaction to the radical
Declaration of Medelln came in 1972 when Alfonso Lpez Trujillo was elected as
CELAMs General Secretary. In close cooperation with his theological associate,
Belgiums Roger Vekemans, the conservatives started to articulate against the
liberation theologians, arguing that religion cannot be reduced to politics, and that the
church is not a political organization.
4.1.2.2. Puebla (1979)
Liberation theology reached its pinnacle of influence during the third general
conference of the CELAM, which took place in Puebla in January 1979. In Mexico,
the CELAM expanded on the concept of liberation. The notion permeates the final
document: liberation is seen as indispensable (562, 1270), essential (1302).
The first cracks in the edifice of liberation theology, nonetheless, also appeared at the
Puebla conference.
The appearance of Pope John Paul II in Mexico was the first major public
confrontation between the Vatican and liberation theology. It was Pope John Paul IIs
papal baptism, as he only recently had been elected. During his first major tour
overseas, he spent ten days visiting El Salvador and Mexico. He electrified the largest
crowds in Mexican history, gathering over 18 million people, delivering 28 speeches,
of which 17 were major political statements. In his first address in the Mexican
capital, the Polish pope criticized both the left and the right of the political specter. On
the one hand, he criticized those who in the name of misinformed prophetism have
launched themselves on a risky and utopian construction of a socalled church of the
future. On the other hand, he equally stressed that those who cannot be considered
faithful who remain attached to incidental aspects of the church, which were valid in
the past but which have been superseded.
At his first major speech delivered at the opening of the assembly, Pope John Paul II
declared that the church is firmly committed to fighting injustice, but sharply
cautioned against aligning the church with any particular political or socioeconomic
solution to human problems. Right at the outset of his opening address, he emphasizes
that the Puebla meeting is fraternal gathering of church pastors, and not a
symposium of experts or a parliament of politicians or a congress of scientists or
technologists. Moreover, the pope warns: In some instances an attitude of mistrust
is fostered toward the institutional or official church, which is described as
alienating. In a quest to combat such tendencies, the pope recalls the question once
posed in an Apostolic Exhortation by Pope Paul VI: If the Gospel proclaimed by us
seems to be rent by doctrinal disputes, ideological polarizations, or mutual
condemnations among Christians, if it is at the mercy of their differing views about
Christ and the church, and even of their differing conceptions of human society and
97
its institutions, [] how can those to whom we address our preaching fail to be
disturbed, disoriented, and even scandalized?183
The pope immediately wishes to sweep away the confusion that Christianity is
reducible to Marxist categories. He criticizes liberationist tendencies to reduce the
Gospel message to a political program and the portrayal of Christ as the revolutionary
subversive. According to the newly elected pope, there should be no room for an
ideology of liberation based on a class struggle. There is no room for a partisan
church, which politicizes pastoral ministries: This conception of Christ as a political
figure, a revolutionary, as the subversive man from Nazareth, does not tally with the
churchs catechism. According to the pope, such idea confuses the insidious pretext
of Jesus accusers with the attitude of Jesus himself which was very different
people claim that the cause of his death was the result of a political conflict; they say
nothing about the Lords willing selfsurrender or even his awareness of his
redemptive mission. The pope warns against such rereadings, which perhaps
brilliant, are fragile and inconsistent hypotheses.184 The pope also quotes his
predecessor by underlining that it is a mistake to state that political, economic, and
social liberation coincide with salvation in Jesus Christ; that the regnum Dei is
identified with the regnum hominis. In addition: If we are to safeguard the
originality of Christian liberation and the energies that it is capable of releasing, we
must at all costs avoid reductionism and ambiguity.185 The popes unequivocal
critique of liberation theology can be read as a first warning against revolutionary
Marxist influences within the church.
In the aftermath of the Puebla, both defenders and adversaries of liberation theology
claimed victory in the fierce battle over who had won the conference. From the
outset, it was clear that both camps could declare victory by picking or stressing their
respective favorite passages. The pope himself seems to have anticipated such heated
debates, by himself walking the fine line between the extremes. He urges the church
and its ministers to obtain the boldness of prophets and the evangelical prudence of
pastors; the clear sightedness of teachers and the confident certainty of guides and
directors; courage as witnesses, and the calmness, patience, and gentleness of
fathers.
This battle of who had won the conference inaugurated a new stage in liberationist
thought. Leonardo Boff captured the atmosphere by arguing that the defining mark of
the period was not defined by liberation but captivity: In all likelihood our generation
will not witness the liberation of our continent from hunger and alienation nor the
emergence of a more humane, open, and fraternal society. [] We today live in a
situation of captivity. To believe and hope and work for liberation in such a situation,
when we are fairly sure that we will not live to see the fruits of our work, is to
incarnate in our own day the cross of Christ. We must establish a solid mystique of
183
Pope Paul VI (1975), Evangelii Nuntiandi, Vatican, December 8, 77.
184
Pope John Paul II (1979), Opening Address Third General Assembly Latin America Bishops
Conference, Puebla de los Angeles, Mexico, January 28.
185
Pope John Paul I (1978), Catechetical Lesson on the Theological Virtue of Hope, Vatican:
September 20.
98
hope that goes beyond what is immediately verifiable.186 Whereas Boff speaks of
captivity, others mentioned censure as the defining moment for liberation theology.
4.1.2.3. Santo Domingo (1992)
The Fourth General Conference of the Latin American Episcopate took place in Santo
Domingo in October 1992. It occurred exactly 500 years after Columbus had arrived
in the Americas. The General Assembly in the Dominican Republic was prepared
during nine years, in which fourteen official general and regional preparatory
gathering took place.
Although the movement of liberation theology was still powerfully present but at the
hierarchical and grassroots levels, it was not officially placed on the agenda. The
central theme of Santo Domingo was New Evangelization, with a special focus on the
impact of growing secularization, the expansion of new religious movements and the
search for ways to defend life in the midst of a culture of death. Santo Domingo was
supposed to lay the foundation for a new strategy to promote the threefold theme of
new evangelization, promotion of human dignity and Christian culture.
In the preparatory Documento de Consulta, the CELAM develops an evangelization

strategy in which the concept of liberation is ignored. Preparatory documents had
warned that some pastoral workers are caught up in ideologies and spread dissension
within the church and that some liberation theologians consciously make an
ideology out of the doctrine of Jesus Christ.187 Instead of focusing on socioeconomic
issues, the document rather focuses on the culturalethical crisis, for which only a
theology of the inculturation of faith is seen as the answer. Such analysis in the
preparatory phase of the conference was not shared by the Bishops conferences at
most national levels. Several bishops argued for the rehabilitation of liberation
theology, as a necessary instrument to speak out against social injustice and human
rights violations. In its preparatory document for Santo Domingo, the National
Conference of Brazilian Bishops (CNBB) stresses that neoliberalism presents itself as
the only gospel of the modern times, which, contrary to the Gospel of Jesus Christ,
and under the guise of the free market, wants to proclaim to the rich minority the
message of the preservation of their privileges at the cost of the poor majority. In
addition, it emphasizes that in this ideology lay the roots of many evils caused by
international business, offering the legitimation for the economic mechanisms leading
to the oppression and exploitation of the poor countries by the rich.188
The Working Document again incorporates the concept of liberation, but does not
directly link it to the socioeconomic or political situation. According to the Working
Document, liberation means conversion of the heart (conversion to God), liberation
from prejudices (conversion to the truth, as only truth can set one free), and liberation
186
Boff, Leonardo (1979), Christs Liberation via Oppression: An Attempt at Theological
Construction from the Standpoint of Latin America; in: Gibellini, Rosino (1979), Frontiers of
Theology in Latin America, Maryknoll, New York: Orbis, pp. 129130.
187
CELAM (1991), Documento de Consulta. Nueva Evangelizacin, Promocin Humana, Cultura
cristiana Jesucristo ayer, hoy y siempre, Santaf de Bogot, 219.
188
CNBB (1992), Contribuio para a Quarta Conferncia Geral, Braslia, 675.
99
from freedom. It moreover contends that every effort to search the complete
development of the human person outside Christianity ends in disillusionment and
frustration.189 By focusing on liberation from the power of the devil (349)
liberation from suppressive traditions (362), on liberation from excessive self
interest (364), the Working Document effectively coopts terminology originally
adopted by liberation theologians.
The Documento Final turned out to be a compromise, in which efforts are made to
present an image of consensus. On the one hand, the document passes a negative
judgment on modern culture, which is regarded as the main culprit for the ethical
crisis. A striking number of paragraphs address the loss of human and Christian norms
and values. It condemns anthropocentrism, secularism, religious indifference,
idolatry, permissiveness and subjectivistic relativism. The pastoral strategy proposed
is the inculturation of faith, which is an attempt to place Latin American culture more
in line with Catholicism. In other sections, the document connects evangelization with
the commitment for the integral liberation of person and society. The document tries
to establish a synthesis between the missiological concepts of inculturation, liberation
and interreligious dialogue. The Final Document stresses that the neoliberal policies
serve to deregulate the market indiscriminately, to eliminate important parts of labor
legislation as well as laborers jobs, [] to reduce social expenditures that protect
workers families. It moreover questions whether Latin American countries should
pay their foreign debt if to do so would seriously endanger the peoples survival.
In sum, the fourth CELAM conference no longer stresses a preferential option of the
poor but focuses on three new priorities: the new evangelization, human development,
and the evangelization of culture. The third priority opens the door to reconnect with
the middle classes, which were forgotten during the last decades. Santo Domingo
pleads for a growing support of participatory democracy. The CELAM opts for not
making a theological or systemic analysis of the freemarket economy. The absence
is based on the assumption that the mission of the church is not directly related to the
political, economic or social world. The new emphasis on native cultures poses a new
challenge for liberation theologians. Marxist analytical tools are out, cultural
anthropology is in.190 Economics is deemed to be an urgent theme, but not an essential
one which needs to be addressed in detail.
4.1.2.4. Aparecida (2007)
The Fifth General Assembly of the CELAM took place in Aparecida, Brazil, in May
2007. The ecclesial, political and economic context surrounding this general assembly
had again changed dramatically since the CELAM convened in Santo Domingo. The
most dramatic transformation since Santo Domingo has occurred in the very religious
landscape. Latin America is turning Pentecostal even faster than Europe turned
Protestant in the sixteenth century. According to Evangelical scholar William Taylor,
Latin American Protestants have shot up from 50,000 in 1900 to 64 million in 2000,
189
CELAM (1992), Working Document, Santaf de Bogot, June, 529.
190
For an indepth analysis of the conference, in which I participated as an observer, see: Van de Ven,
Johannes (1994), Dvida Externa e Neoliberalismo na Amrica Latina Como Desafios
Contemporneos Teologia da Libertao, Nijmegen: Catholic University Press, pp. 62123.
100
with Pentecostal and charismatic churches making up threequarters of this number.

In a study conducted in the late 1990s, the CELAM found that 8,000 Latin Americans
were deserting the Catholic Church for Evangelical Protestantism every day. In the
last decades, Brazil has lost half a million Catholics every year to Pentecostalism. The
evangelicals are even becoming an important political force in Braslia and are now
making up over 20 percent of its population. In the early 2000s, the proportion of
Catholics has dropped from 84 percent to 67 percent. In Mexico, the statistics point a
similar trend.191 Urbanization and violence, at the expense of traditional structures
such as family and community, have led to a growing identity crisis and moral
confusion among the poor.192 Many former participants in the socalled comunidades
eclesiais de base are now aligning themselves with Pentecostal churches, much to the
dismay of Catholic clergy.
The view that the moral climate in Latin America since Santo Domingo has
dramatically changed, especially in religious and cultural terms, is not shared by
Pedro Assis Ribeiro de Oliveira. In liberationist terms, he continues to argue that the
moral climate is mostly characterized by socioeconomic and political context. At the
outset of the Aparecida gathering, he argues as follows: Latin America, still on the
periphery of the world economic system and constituted to be economically exploited
by the metropolises is currently experiencing a wave of political participation on the
part of the most popular sectors of society in search of real democracy and of other
possibilities for Latin America. These signs of the times are challenging the Catholic
Church where the pastoral committed to the popular struggle and to Human Rights is
being contested by the conservative sectors.193 Along the same ideological lines, the
Belgian theologian Jos Comblin argues that the new situation caused by the
conquest of the world by the world capitalist system forces the Church to change its
attitude towards the world. The Church seems to be silent and confused. Will the Pope
be able to give clear prophetic signs in this neoliberal world?194 Such conspiracy
theories are more reminiscent of the Medelln and Puebla era.
At the preparatory 29th Ordinary Assembly, which was held in Tuparenda, Paraguay,
in May 2003, participants were fully aware of the rise of Pentecostalism but they still
opted for the concept of globalization as the new epistemological key. At Tuparenda,
the bishops argued that globalization represents a great challenge for humanity and
for the church, which has both positive and negative results. According to the
participants, benefits from globalization from below include small local communities
finding themselves propelled into communication with big international bodies and
greater access to news by means of the internet. Beneficial are also the globalized
191
Allen, John (2006), The Dramatic Growth of Evangelicals in Latin America, National Catholic
Reporter, August 18.
192
Violence in Rio de Janeiro, the metropolitan area in which I have conducted most of my doctorate
research, is one of the biggest concerns of its population. The Brazilian Institute of Social Research
(IBPS) conducted a research between April 5 and 11, 2006. It concluded that due to urban violence and
a general sense of public insecurity, 51 percent of its inhabitants would leave the city if opportunities
elsewhere arise. Meanwhile, 63 percent has already change daily habits in order to avoid assaults and
kidnapping. The research is available at www.ibpsnet.com.br.
193
Ribeiro de Oliveira, Pedro Assis (2007), Nossa Amrica interpela a Igreja, Revista Eclesistica
Brasileira, 266, p. 360.
194
Comblin, Jos (2007), As grandes incertezas na igreja atual, Revista Eclesistica Brasileira, 266,
p. 36.
101
approach to fight against diseases and natural disasters, a greater insistence on

universal human rights and the spread of democracy. The negative effects of
globalization are mainly economic. The Free Trade Area of the Americas is attacked
for not obvious reasons. The CELAM also argues that the overweight of the United
States needs to be counterbalanced by growing regional alliances. This rather
ideological statement also remains hanging in the air. The Tuparenda Conclusions call
for a globalization of solidarity, but stops short at telling what this would imply at the
practical level.
The Participation Document for Aparecida was published in September 2005.195 This
preparatory document is an invitation for the national conferences to share their
experiences, reflections and charisma, which will all contribute to the drafting of a
final document for the conference.196 The document correctly warns for the dangers of
aggressive proselytism against the Catholic Church [] by a certain theology of
prosperity, very distant from the Gospel message and religious and moral
syncretism (148). It moreover emphasizes that the church has probably neglected
the formation of the laity (154) and failure to act consistently according to the
social teachings of the church. The document also appropriately argues that endemic
corruption in politics and the judiciary system is the main cause of underdevelopment.
The document unequivocally condemns the growing tendency to applaud the
emergence of messianic leaders or commanders of a populist nature. Populist leaders
who promise paradise, while undermining basic human rights and at the cost of
sacrificing important rights and public freedoms (131). Although the document
does not mention names, it clearly refers to the new populist leaders, including
Venezuelas President Chavez, Bolivias President Morales, Nicaraguas President
Ortega and (the former Louvain economics student) President Correa of Ecuador. The
fact that corruption is considered as a root cause of misery is without precedent in
CELAMs history. In past conferences, misery has mostly been blamed on foreigners
and outside forces. Not all bishops were happy with this courageous position. Bishop
Antnio Celso Queiroz of Brazils Catanduva diocese, for example, has argued that
the recent election results in Brazil, Ecuador, Nicaragua, and Venezuela amount to a
repudiation of Latin Americas status as a back porch of the United States.
Along the same lines as in Tuparenda, the Participation Document argues the
multifaceted phenomenon of globalization as a challenge to the economy, life and
identity of our people and to their New Evangelization (37). Globalization is also
blamed for the high poverty levels. This is the only part of the Working Document,
which is heavily influenced by liberation theologians. Economic globalization
generates in a more or less systematic way, poverty and diverse forms of
marginalization that gravely affect many peoples (118). The document moreover
argues that the breach among rich and poor widens instead of diminishing, and the
195
CELAM (2005), Towards the V Conference of the Bishops of Latin America and the Caribbean:
Missionary Disciples of Jesus Christ So That Our Peoples May Have Life In Him, Santiago,
September 8.
196
The Participation Document is broken down into five chapters. The first chapter examines the
deepest desires of man in his humanity and in baptism. The second chapter meditates on the blessings
the gospel has brought to Latin America. The third concentrates on the encounter with Christ and His
invitation to be disciples and missionaries in communion with the church. The fourth chapter addresses
the challenges facing the church in the new millennium. The final chapter emphasizes the urgency of
Christs mission in the world today.
102
efforts to significantly diminish poverty are almost always insufficient or inadequate

(119). The comments on globalization contrast with CELAMs condemnation of
corruption and messianic populism as the major culprits of persistent poverty. In
another section, which is inspired on liberation theology, the Participation Document
argues that the asymmetric globalization of antivalues is causing a real revolution in
our cultural environment: it tends to alter the cultural identity of almost all peoples:
while it promotes the cult to oneself, to money and pleasure, it goes against solidarity
with the excluded (121). In this part of the Working Document, it becomes clear
that liberation theologians increasingly blame poverty, urban violence and mass
unemployment on globalization. Neoliberalism is replaced by globalization as the
major culprit for most evils.
The general assembly was further anticipated by the publication of the Synthesis,
which gathered the contributions from the twentyone regional bishops
conferences.197 The impact of globalization on church and society is again a central
point of attention. First, the document correctly argues that it represents an
opportunity for a renewed awareness of the catholicity of the Church (60), which is
followed by a section heavily influenced by liberation theology. It argues that it
cannot be ignored that much of this globalized culture is at the service of transnational
economic interests. Economic globalization might bring many economic benefits
for those who succeed in entering into the necessary high level of knowledge and
technology, but it leaves out those who have fewer skills and chances for competing
in an economy open to the world, creating situations of extreme need, inequality, and
poverty. This is a rather controversial statement, which is not backedup by
empirical data. The document argues that political power in nations cedes before the
interdependencies of an economic nature in the new global settings. Moreover,
neoliberal economics, when it is not corrected by the commitment to the weakest, in
fact further weakens Latin American democracies, which generally do not have firm
and solid institutions and suffer from the temptation to populist solutions or succumb
to corruption at many levels. The socalled financial economy tends to prevail in its
decisive role over the productive and social economy, and consequently the future of
our nations is conditioned by the ebb and flow of speculative capital.
The connection of neoliberal economics with populist solutions and corruption

at many levels is too farfetched. The use of the expression speculative capital,
which is not further explained, does also not make much sense. The Synthesis here
remains stuck in vague liberationists expressions such as the logic of the market
colonizes political and scientific life (61). In this context, the Synthesis also quotes
a speech of Pope Benedict XVI, arguing that is imperative that the structural causes
of the dysfunctions of the world economy be eliminated (63). The Synthesis here
erroneously gives the impression that the pope was referring to the logic of the
market or that there exists a correlation or causal relationship between freedom on
the one hand and economic poverty on the other hand. There is ample evidence that
the opposite is true. It would have been wiser if the document had placed the popes
quotation in the section where the rise of messianic leaders correctly is decried: This
crisis is manifested in many ways, one of the most worrisome being corruption, and
the emergence of strongman leadership (caudillismos) with messianic pretensions
197
CELAM (2007), Synthesis of Contributions Received for the Fifth General Conference,
Aparecida, May 13.
103
and manichaeistic ways of speaking, tolerating, or inciting to violence, tend to wield

state control over educational institutions, the media, the economy, and society
(72). In this section, the document prophetically points at the dangers of populism:
Sometimes they even make use of a religious language, and present themselves as
redeemers of social life. In such circumstances, the freedom of the Church, which
must be exercised and defended with great courage, becomes a symbol for society, a
refuge for the persecuted, the primary guarantee of rights and citizen freedoms, and a
promise of freedom for all. The preparatory process for Aparecida has made clear
that there still exists a huge ideological divide within the bishops conference.
As assemblys preparatory documents were a mixture that tried to please everyone,

Church and society were eagerly awaiting Pope Benedict XVIs opening speech in
Aparecida on May 13, 2007. Whereas Pope John Paul II had set the agenda for Puebla
in 1979 and Santo Domingo in 1992, so Pope Benedict XVI was expected to set the
tone for Aparecida. These expectations were not too high. The popes 6,000word
opening address to the 162 participating cardinals and bishops, speaking in Spanish
and Portuguese, turned out to be the highlight of the assembly.
Right at the outset, the pope argued that despite notable progress towards
democracy, there are grounds for concern in the face of authoritarian forms of
government and regimes wedded to certain ideologies that we thought had been
superseded, and which do not correspond to the Christian vision of man and society as
taught by the Social Doctrine of the Church. Although not mentioned by name, the
pope clearly referred to new authoritarian regimes in Venezuela, Bolivia and Ecuador.
Pope Benedict XVI did not only attack Marxist regimes but was equally critical of
capitalism: the great error of the dominant tendencies of the last century, a most
destructive error are resulting both from Marxist and capitalist systems. According
to the pope, they falsify the notion of reality by detaching it from the foundational
and decisive reality which is God and anyone who excludes God from his horizons
falsifies the notion of reality and, in consequence, can only end up in blind alleys or
with recipes for destruction. The pope here rejects the ideological promise of both
capitalism and Marxism. Both promised that they have no need of any prior
individual morality, but that they would promote a communal morality: The Marxist
system, where it found its way into government, not only left a sad heritage of
economic and ecological destruction, but also a painful destruction of the human
spirit. The pope recalled in this context the encyclical Populorum Progressio, which
emphasized that authentic development must be integral, that is, directed to the
promotion of the whole person and of all people, and it invites all to overcome grave
social inequalities and the enormous differences in access to goods. In an indirect
criticism to liberation theology, the pope however warned that the political task is not
the immediate competence of the Church: If the Church were to start transforming
herself into a directly political subject, she would do less, not more, for the poor and
for justice, because she would lose her independence and her moral authority,
identifying herself with a single political path and with debatable partisan positions.
Instead, the pope defended a church which is the advocate of justice and of the
poor, precisely by not identifying with politicians nor with partisan interests.
According to the pope, only by remaining independent can she teach the great
criteria and inalienable values, guide consciences and offer a life choice that goes
104
beyond the political sphere. The ultimate concern of the church is to form
consciences, to be the advocate of justice and truth, to educate in individual and
political virtues: that is the fundamental vocation of the Church in this area. At the
same time, the pope endorsed the preferential option for the poor, arguing that it is
implicit in the Christological faith in the God who became poor for us, so as to enrich
us with his poverty.198 On the whole, the opening speech of Pope Benedict XVI
covered mostly familiar ground. Marxism and capitalism were equally criticized, the
preferential option for the poor reaffirmed but without mentioning liberation theology
by its name.
The general assembly, which succeeded the popes inaugural address, took 19 days of
deliberations among 162 cardinals and bishops, 81 other participants, and 23
observers and theological advisors. The vote of approval for the Final Document was
127 votes in favor and 2 against. Documents from previous CELAM gatherings have
not received formal Vatican approval, which means that they do not constitute official
magisterial teaching. The Final Document nevertheless provides an important
blueprint for pastoral guidelines in the region.
The Holy See made public on July 11 the letter by which the Holy Father authorized
the publication of the final document of the Aparecida Conference. What can be
concluded is that the core legacy of liberation theology has been cautiously embraced
by the bishops. Crucial however for a correct interpretation of Aparecida is paragraph
100b, which states as follows: We regret our feeble experiences of the preferential
option for the poor, not a few secularizing falls in consecrated life, influenced by a
merely sociological, and not evangelical, anthropology. As the Holy Father spoke in
the Inaugural Speech of our Conference, one can detect a certain weakening of
Christian life in society overall and of participation in the life of the Catholic
Church.199 The CELAM explicitly affirmed liberation theologys option for the
poor, but changed it to become a preferential and evangelical option (446e),
underlining that it eventually is not about political commitment. Pope Benedict XVI
has left clear that just economic structures can only come from the spiritual and moral
values provided by religious faith.
The CELAM continues to speak about the exodus of the faithful to the sects (185).
The use of this derogatory term is a lack of respect for the evangelical churches. The
use of the concept sects is also counterproductive. It would have been wiser if the
CELAM had contemplated the following words of Cardinal Ratzinger: We should
also observe that the United States is involved to a large extent in promoting
Protestantism in Latin America and hence in the breakup of the Catholic Church
through the work of free church formations. It does so out of the conviction that the
Catholic Church is incapable of guaranteeing a stable political and economic system,
since it is considered an unreliable educator of nations. The underlying expectation is
that the free churches model, instead, will be able to create a moral consensus and to
form a democratic public will that are similar to those of the United States.200 This
198
Pope Benedict XVI (2007), Opening Address V CELAM General Conference, Aparecida, May 13.
199
CELAM (2007), Documento de Aparecida, Santaf de Bogot, July 11. This is my translation
from the original Spanish version.
200
Ratzinger, Joseph & Marcello Pera (2006), Without Roots: The West, Relativism, Christianity,
Islam, New York: Basic, pp. 7071.
105
analysis was made in 2004 and is much more accurate than the words of the Latin
American bishops. Unfortunately, the CELAM also seems to ignore the valuable
contribution of Maria Clara Bingemer to the debate. The Brazilian theologian
convincingly argues for the establishment of boundaries of the epistemological
premises for a theology of the interreligious dialogue.201
The Fifth General Conference concluded with the call to a Continental Mission
(551), a regionwide pastoral initiative described by the final message as a new
Pentecost (362 and 548). The term new Pentecost is an awkward choice as the
biggest pastoral challenge for the Catholic Church exactly emanates from the
Pentecostal churches. Instead of using this controversial expression, it would have
wiser to present practical pastoral guidelines or strategies. Aparecida also missed an
opportunity to strongly condemn corruption and populism as the main causes of
misery. Instead, the Final Document mentions the concept market twelve times,
mostly with a negative connotation. Aparecida will be remembered as an assembly of
compromises, which tried to please everyone. The CELAM at Aparecida did not have
the courage to face the most serious challenges facing church and society, which are
socialist populism and Pentecostalism. Aparecida should therefore be regarded mostly
as a missed opportunity.
4.1.3. Theology as a Language of Liberation
This section will present an analysis of the most important writings of liberation
theologians concerning economics and business ethics. The bedrock principle of
liberation theology, which takes a center stage in all liberationist writing, is a
preferential option for the poor. What all liberation theologians have in common is its
prime concern, which is a quest to liberate society, church and theology from
capitalism and/or neoliberalism. It pictures itself as an emancipatory discourse with a
desire to free people from the servitude of the capitalist order. In todays vocabulary,
liberation theology claims to be a paradigm for social change against the forces of
globalization, which it interprets as a race to the bottom.
In an attempt to identify how liberation theologians relate to business ethics and

economics, the writings of three distinguished liberation theologians will be
examined. Each has a distinctive perspective and method. First, the focus will be on
the writings of Gustavo Gutirrez, who is widely regarded as the father of liberation
theology. Next, the writings of Cldovis Boff will be examined. His methodology has
been widely praised and adopted. Finally, the writings of Franz Hinkelammert will be
highlighted. He represents the most radical wing of liberationist thought. These three
liberation theologians have made substantial and significant contributions to the
business ethics debate.
201
Bingemer, Maria Clara Lucchetti & Gilbraz de Souza Arago (2006), Teologia,
transdisciplinaridade e fsica: uma nova lgica para o dilogo interreligioso, Revista Eclesistica
Brasileira, 263, pp. 880920.
106
4.1.3.1. Gustavo Gutirrez
Gutirrezs book Teologa de la liberacin (1971) was a systematic attempt to

formulate a new way of conducting theology.202 The Peruvian theologian, born in
1928, who studied philosophy and psychology at the Catholic University of Louvain,
defines liberation theology as a critical reflection on praxis in light of the World of
God. He argues that among more alert people today, what we have called a new
awareness of Latin American reality is making headway. They believe that there can
be authentic development for Latin America only if there is liberation from the
domination exercised by the greatest capitalist countries, especially the most
powerful, the United States of America.203 This antagonistic worldview is
characteristic of the early days of liberation theology.
Gutirrez argues that theological reflection necessarily is a criticism of society and the
church insofar as they are called and addressed by the Word of God. It is also a
critical theory, inspired by the Gospel, adopted by the heart and linked to historical
praxis. The biggest novelty was his rejection of the widespread notion that theology is
a systematic collection of timeless and culturetranscending truths, which supposedly
remain static throughout the ages. In return, he defends that theology should not be
static nor passive, but rather dynamic, as an ongoing exercise involving contemporary
insights into scientific knowledge, humanity and history. Gutirrez argues that the
traditional theology manipulates and distorts the image of God by focusing on a static
being somewhere out there, a faraway transcendent deity removed from the daily
affairs of humanity. As a consequence, the church has erroneously adopted a passive
stance in the face of current affairs.
Gutirrez opens his magnum opus by arguing that Latin America is an oppressed and
exploited land. He defines his main objective as follows: It is a theological
reflection born of the experience of shared efforts to abolish the current unjust
situation and to build a different society, freer and more human [...] My purpose is not
to elaborate an ideology to justify positions already taken [...] It is to reconsider the
great themes of the Christian life within this radically changed perspective and with
regard to the new questions posed by this commitment.204 This opening statement
clarifies his understanding of the mission of the church and theology. Gutirrez
radicalized in 1976 by stating the following: The poor person is the byproduct of the
system in which we live and for which we are responsible. He is the oppressed, the
exploited, the proletarian, the one deprived of the fruit of his labor and despoiled of
being a person. For that reason the poverty of the poor person is not a call for a
generous act which will alleviate his misery but rather a demand for building a
different social order.205 For Gutirrez, in order to be and remain relevant, a
theologian must be immersed in the struggle for the transformation of society.
202
Besides being a founding father of liberation theology, Gustavo Gutirrez is also one of the most
influential theologians at the global level. He was born in Lima, Peru, in 1928, and studied in Rome
and France. In the late 1990s, he became a member of the Dominican Order.
203
Gutirrez, Gustavo (1971), Theology of Liberation, Maryknoll, New York: Orbis, p. 11 and p. 88.
204
Idem, p. xiii.
205
Gutirrez, Gustavo (1976), Faith as Freedom: Solidarity with the Alienated and Confidence in the
Future; in: Eigo, Francis, In Living with Change, Experience, Faith, Villanova, Pennsylvania:
Villanova University Press.
107
Gutirrez defends a preferential but not exclusive option for the poor. He argues that
the adjective preferential recalls the other dimension of the gratuitous love of God,
the universality. He also argues that in English the word option merely connotes a
choice between two things, whereas in Spanish (or Portuguese), it primarily evokes
the sense of commitment: The option for the poor is twofold: it involves standing in
solidarity with the poor, but it also entails a stance against inhumane poverty.206 In
other words, for Gutirrez the church must become not only a church for the poor, or
a church working with the poor, but mostly a church of the poor. Gutirrez
distinguished three form of poverty: material, spiritual and voluntary poverty. He
argues that notion of spiritual poverty has historically been misused to serve the
material interests of the wealthy.207 A genuine, sincere spiritual poverty will
necessarily manifest itself in a life of material simplicity or voluntary poverty.
In his methodology, the relationship between Christian praxis and theological

reflection forms a hermeneutic circle. He opts for an epistemological rupture, in a
quest to establish a socalled church of the poor. The hermeneutic key are the
excluded, the marginalized and the victims of the capitalist system. For
Gutirrez, the universality of Gods love, as witnessed in the Scripture, is not neutral:
Gods love is not an ahistorical abstraction but is made manifest in history. Gutirrez
argues that integral liberation has three dimensions, which are intimately related.
First, he points at political liberation from unjust socioeconomic and political
structures. In the second place, he addresses psychological or anthropological
liberation, in which the subject becomes an authentic agent for his own historical
transformation. In the third place liberation from sin, which he relates to the Christian
notion of salvation.
Capitalism is sinful, not as a violation of human rights, but primarily as a breach of

friendship with God. He argues that sin is not considered as an individual, private, or
merely interior reality. Sin is regarded as a social, historical fact, the absence of
brotherhood and love in relationships among men.208 The socioeconomic and
political implications of sin are crucial for a good understanding of his approach. The
disruptive sinful structures call for a radical stance: The building of a just society
means the confrontation in which different kinds of violence are present between
groups with different interest and opinions.209 His stresses that it is becoming more
evident that the Latin American peoples will not emerge from their present status
except by means of a profound transformation, a social revolution, which will
radically and qualitatively change the conditions in which they now live.210
Gutirrezs account of the irruption of the poor fomented revolutionary expectations

throughout Latin America: to know God is to do justice. His theology has often been
regarded as pioneering a reconceptualization of pastoral guidelines and theological
reflection. In other words, the Peruvian theologian buried a reformist pastoral, and
206
Hartnett, Daniel (2003), Remembering the Poor. An Interview with Gustavo Gutirrez, America,
February 3, p. 14.
207
Gutirrez, Gustavo (1971), Theology of Liberation, Maryknoll, New York: Orbis, pp. 287306.
208
Idem, p. 175.
209
Idem, p. 31.
210
Idem, p. 64.
108
adopted a pastoral methodology with the following line of reasoning: poverty leads to
dependency, which is the result of oppression and exploitation, which should lead to
conscientization by means of revolution. These are the typical epistemological keys
employed in Gutirrezs theology. Gutirrez argues for example that the liberation of
our continent means more than overcoming economic, social, and political
dependence. It means, in a deeper sense, to see the becoming of mankind as a process
of the emancipation of man in history. It is to see man in search of a qualitatively
different society in which he will be free from all servitude, in which he will be the
artisan of his own destiny. It is to seek, the building of a new man.211
This rather radical rhetoric of revolutionary liberation has not been shared by the
Vatican. His rather naive endorsement of a socialist utopian project raised several
eyebrows, which haunted and ultimately undermined his attempts to construct a
coherent theology. As early as March 1983, Joseph Cardinal Ratzinger, who back
then was the prefect of the Congregation for the Doctrine of the Faith, promulgated
ten observations. The Congregation condemned the uncritical acceptance of the
Marxist interpretation of the socioeconomic and political situation in Latin
America, as employed by Gutirrez. The Congregation also criticizes the fact that
Gutirrez reduces liberation to political liberation and that Exodus is considered a
political event.212 Later, Gutirrez himself acknowledged that in the early days of
liberation theology, there has been a tendency to uncritically accepting the claims
Marxist and dependency theories, which were erroneously used as socialanalytical
mediations.
In more recent writings, Gutirrez has emphasized the contemplative and affective
dimension of liberation. In one his most intriguing writings on the book of Job, he
tries to tackle the question how can one speak of a loving God in the midst of
innocent suffering? The reader is invited to accompany Job in his quest for justice.
The main lesson, according to Gutirrez, is that Job refused to surrender either his
conviction of his own innocence of his faith in God.213 For Gutirrez, the prophetic
language of justice and liberation has to be nourished by the silence of contemplative
worship. It is here that the revolutionary praxis and the Christian mysticism come
together.
In sum, Gutirrezs most relevant contribution is his emphasis on recovering the rich
cultural heritage, the anthropological narratives and spiritual resources of the poor.214
At a great cost, this dimension has too often been overlooked in the early days of
liberation theology. By shifting the popular pastoral ministries from spiritual to purely
socio-political, ideological and economic matters between the 1960s and 1980s,
211
Gutirrez, Gustavo (1971), Theology of Liberation, Maryknoll, New York: Orbis (1988 edition),
p. 91.
212
Congregation for the Doctrine of the Faith (1983), Ten Observations on the Theology of Gustavo
Gutirrez; in: Hennelly, Alfred (1992), Liberation Theology: A Documentary History, Maryknoll,
New York: Orbis, p. 349.
213
Gutirrez, Gustavo (1987), On Job: GodTalk and the Suffering of the Innocent, Maryknoll, New
York: Orbis.
214
Gutirrez, Gustavo (1984), We Drink from Our Own Wells: The Spiritual Journey of a People,
Maryknoll, New York: Orbis.
109
Gutirrezs early writings have therefore actually hastened the exodus of Catholics to
Pentecostal churches.215
4.1.3.2. Cldovis Boff
The first systematic and arguably the best attempt to establish the epistemological
foundations of liberation theology was undertaken by Cldovis Boff.216 Whereas
Gutirrez proposed a new way of doing theology, it was Cldovis Boff who redefined
the theological methodology in the post Vatican IIera. His objective is to establish a
new attitude of mind, or particular style of thinking the faith.217 His more widely
read brother Leonardo Boff might have gained the spotlight for establishing a Latin
American political theology; it is Cldovis who reshaped the epistemological
boundaries of doing theology. His writings on methodology have been canonized in
Mysterium Liberationis, a compendium of essays developed in the early 1990s with
the specific intent of defining liberation theologys central categories.218
Inspired by the theology of Gustavo Gutirrez and Hugo Assmann, the doctoral thesis
of Cldovis, defended in 1976 at the Universit Catholique de Louvain, clarifies and
articulates the boundaries of the dialectic relationships among theology, the political,
the social sciences, hermeneutics and praxis. His theoretical and pastoral deliberations
are based on bottomup experiences, and is a more varied, more subtle and more
substantial than many of the popular works available on the subject. His writings,
which excel in consistency and coherency, have been influential across theological
seminars and universities worldwide, especially in Latin America. Cldovis Boff
theologized the philosophical methodology of Louis Althusser and Paul Ricoeur and
the sociological writings of Pierre Bourdieu. His methodology departs from
mainstream theological works. It is important to emphasize that he directs his writings
to theology of the political, which not only includes theology of liberation, but also
theology of revolution, theology of captivity or theology of violence. He speaks of
theology of the political, not of political theology. For Cldovis Boff, the effort to de
215
One of the first scholars who convincingly pointed at how the Catholic Church was losing the battle
for souls in urban Brazil against Pentecostalism was Syracuse University Professor in Anthropology
John Burdick. His findings are based on extensive fieldwork in the Baixada Fluminense, which is same
metropolitan region of Rio de Janeiro where I have conducted my own doctoral research. See: Burdick,
John (1993), Looking for God in Brazil: The Progressive Catholic Church in Urban Brazils Religious
Areas, Berkeley, CA: University of California Press.
216
With regards to the methodology of liberation theology, the writings of Ignacio Ellacura also
deserve special credit. His theology would probably have been more widespread and wellknown if he
was not assassinated on November 16, 1989. His early writings have been crucial to the evolution of
the liberationist school of thought. In his posthumously published lecture notes Filosofia de la realidad
histrica, he argues, like Cldovis Boff, that theology has to be anchored in the concrete socio
economic and political context. In his own terminology, theology has to deal first with the dynamic
reality in the evolution of the human history in order to move from structural analysis to the liberation
of new possibilities. Ellacura moreover stressed the utopian potential of religion, as a tool to
continuously and constructively criticize the definition of bonum commune. See: Ellacura, Ignacio
(1993), Utopia and Prophecy in Latin America; in: Ellacura, Ignacio & Jon Sobrino (editors) (1993),
Mysterium Liberationis, Maryknoll, New York: Orbis.
217
Boff, Cldovis (1987), Theology and Praxis: Epistemological Foundations, Maryknoll, New
York: Orbis, p. xxi.
218
Boff, Cldovis (1993), Epistemology and Method of the Theology of Liberation, in: Ellacura,
Ignacio & Jon Sobrino (editors) (1993), Mysterium Liberationis, Maryknoll, New York: Orbis.
110
adjectivize has a precise epistemological bearing as he tries to keep the political or

social object at a distance from its theological theory. In his understanding,
epistemology is ancillary to theology, and theology is ancillary to the praxis of faith.
He departs from the classic theology of social morality. In other words, his theology
does not deal with political questions in the form of questions with ties to ethics. He
rejects such approach by reason of its abstract nature, which necessarily leads to
moralism or idealism. Social morality, according to Cldovis Boff, has to be rejected
as it imposes two basic limitations on social and political questions: Interpretation
was retrenched with respect to its object and application was retrenched with respect
to its method.219
Cldovis Boffs analysis is not based on or departing from dogmas or a fixed set of
principles. His theology has theoretical exigencies, which can be grouped in three
question areas. The first question area refers to the relationships between theology and
the social sciences. The second question area embraces the relationship between
theology and the Sacred Scripture. The last area involves the relationship between
theology and praxis. According to Cldovis Boff, theology urgently needs to address
these areas of concern in order to remain relevant. He defines epistemology as the
study of the principles of its construction.220 The three question areas are referred to
as mediations. Before establishing the mediations, Cldovis point at the preliminary
stage or pointofdeparture. This first step is pretheological and involves direct
faith commitment to the oppressed. For Cldovis, it is impossible to become a
liberation theologian without physical contact with the cause of the oppressed, either
fulltime or parttime.
Historically, the philosophical mediation has been the main discussion partner of
theology. Cldovis Boff, however, argues that a socialanalytical mediation is more
relevant than a philosophical one. He rejects a mere philosophical mediation, which
he regards as mostly speculative. According to Cldovis Boff, a philosophical
mediation in the context of Latin America would inevitably end in a mystification of
the reality of the oppressed masses, and more than likely a devastating mystification.
In his viewpoint, a relationship with the empirical, positive analyses makes more
sense: The interfacing of theology with praxis through the medium of socioanalytic
mediation has as its objective the safeguarding of theology from the empty theorism
that, in certain circumstances, is a trait of academic cynicism that ignores the crying
scandal of the starving and suffering multitudes of our world.221
A demand for interdisciplinarity with social sciences should therefore be the point
ofdeparture, as it provides us with the material object of ultimately conducting
theology. Formally speaking, this first step is pretheological. Such an approach calls
for a positive, contextual, and concrete knowledge of society. It rejects speculative
and abstract thought, which is judged ahistorical and alienating. A mediation with
social sciences moreover appears as a demand of the praxis or incarnation of faith.
The social sciences are used to understand the root causes of poverty. Cldovis Boff
claims that there are three main alternative explanations for the oppression: an
219
Boff, Cldovis (1987), Theology and Praxis: Epistemological Foundations, Maryknoll, New
York: Orbis, p. 8.
220
Idem, p. xxii.
221
Idem, p. 7.
111
empiricist explanation, a functionalist explanation and a dialectical explanation. He

rejects the former two and embraces the latter one. Empiricism is rejected because it
fails to take into account the structural dimension of poverty. Its means towards
eradication is based on a sentiment of piety, which eventually does not change the
situation. Functionalism is also rejected as it views poverty as backwardness and calls
for reform. Boff embraces the dialectical explanation as it understands poverty as a
structural phenomenon, which can only be overcome by revolution.
Second, Cldovis Boff examines the relationship between theology and the Sacred
Scripture, which is established in the socalled hermeneutic mediation. From the
outset, he rejects an atemporal or purely spiritual hermeneutic, as if faith can be
privatized. The second mediation, which establishes the mode of appropriation,
involves the question of pertinence. The material object is now exposed to the light of
theologizing reason, an interpretation, which departs from the Sacred Scriptures. In
other words, the material object is placed under a theological grid, which enables the
deciphering of sociopolitical and economic presuppositions. A situation
theologically qualified as sinful, which is regarded as a willful transgression by a
person against God or a fellow human being, is interpreted in its social dimension.
According to Cldovis Boff, a theory can be theological only in virtue of its
pertinence, in virtue of its formal object. He argues that it is erroneous to apply a
theological label to discourses merely because the topic concerns religion. A religious
discourse can be a theologically nonpertinent discourse. A religious discourse has to
be distinguished from a theological one: religious language operates under the rules of
everyday language, whereas theology is governed by pertinence. For Cldovis,
theology has to be executed through an appropriate reading and interpretation of the
Christian tradition and Scriptures, which is the task of the hermeneutic mediation.
Third, Cldovis Boff analyzes the relationship between theology and praxis, which is
established in the socalled practical mediation. He does not discuss praxis in itself
but rather focuses on the epistemological levels or multiple interfacing between
theory and praxis. In this third area, theology finds its finality. Unlike the first and
second mediation, which are a medium quo, this third mediation constitutes a medium
in quo, in the sense that praxis constitutes the de facto vital milieu of the actualization
of concrete theological practice. The praxis is defined as human activity aimed at
transforming the world, the fundamental locus of theology or the place where
theology occurs.
The shape of the action in the practical mediation depends on the specific task of a
theologian. Professional theologians are only challenged to point at broad lines of
change, whereas pastoral theologians can be more specific in their guidelines. Popular
theologians or base community leaders, in return, can be very specific because of their
concrete everyday commitment with the poor. According to Cldovis Boff, the
relationship to praxis ranks among the most difficult of the epistemological problems.
It is here where the Church is most vulnerable and most likely to err occasionally. The
establishment of the theoretical status of praxis is an undertaking beset with pitfalls.222
The real challenge for a theologian is not of knowing whether a theologian should get
engaged, but that of determining which struggle or commitment has to be assumed,
222
Idem, pp. 221222.
112
which political options has to be adopted. In this stage, liberation theology makes a
political option, which it subordinates to praxis. The primacy of praxis maintains that
truth and justice is only obtained through reflection on liberating praxis. Theological
truth is not primarily derived from abstract analysis but rather from reflection on the
praxis. Whereas the notion of pertinence marks the hermeneutic mediation, it is
relevance that defines the third mediation. Liberation is presented both at the ethical
political and soteriological level. Although both levels are complementary, Cldovis
claims that the former has primacy of urgency, while the latter has primacy of value.
In sum, Cldovis Boff redefined the epistemological status of theology: the socio
analytic mediation offers the material theoretical object of theology; the hermeneutic
mediation offers the formal theoretical object of theology; and the practical mediation
offers the real concrete object of theology. In pedagogical terminology: from seeing
(analysis), via judging (discernment) to acting (action). With the benefit of hindsight,
it can be concluded that he was way ahead of the curve in correctly understanding the
dangers of Marxism.
Ever since he wrote his doctoral thesis in the early 1970s in Belgium, Cldovis Boff
warned against the danger of the ideologization of faith: The mediation of social
analyses, then, appears as a demand of the praxis of faith, to the extent that this faith
seeks to be incarnate. This is the level on which the theology of liberation encounters
the problem of Marxist theory, as well as criticisms of the ideologization of faith.223
He argues that Marxism can serve as socioanalytic mediation only at the level of
scientific theory (and only to the extent that it is scientifically scrutinized), and not as
an allexplaining Weltanschauung. For Cldovis Boff, it has always been clear that
theology ceases to be theology if Marxism is accepted as a superstructure. It has
always been clear for Cldovis Boff to make the necessary distinction between the
hypotheticoscientific (historical materialism) and philosophicometaphysical aspect
(dialectical materialism) of Marxism. According to Cldovis Boff, theology is bound
to respect the former, and criticize and reject the latter.224
4.1.3.3. Franz Hinkelammert
The most radical wing of liberation theology is occupied by Franz Hinkelammert.225

Although several mainstream liberation theologians do not share his extreme
viewpoints, he deserves special attention in this study as he was the first liberation
theologian who debated the relationship between theology and economics.226 His
writings have strongly resonated in the work of other theologians, such as Frei Betto,
223
Idem, p. xxi.
224
Idem, p. 224.
225
Franz Hinkelammert studied economics at the Free University of Berlin in the 1960s. In the early
1970s, he worked with the Christian Democratic Party and with the government during Allendes
presidency. Currently he is working at the Departamento Ecumenico de Investigaciones in San Jose,
Costa Rica.
226
For example, one of the most widely respected Latin American theologians, the Brazilian Jesuit
Joo Batista Libnio, does not make any reference to Franz Hinkelammert in his Didactic Overview
of Liberation Theology. See: Libnio, Joo Batista (1991), Avaliao Crtica da Teologia da
Libertao, Belo Horizonte: ISI. Hinkelammerts works is moreover not even mentioned in
Mysterium Liberationis.
113
Rubem Alves, Hugo Assmann, Julio de Santa Ana, Enrique Dussel, and Jung Mo
Sung in Latin America, and Arend van Leeuwen and Ulrich Duchrow.227 These and
other theologians argue that Hinkelammert inaugurated a new phase in liberation
theology by incorporating economic analysis. He has both been praised and criticized
for revitalizing the theological methodology by incorporating Marxist analysis into
Biblical hermeneutics. Antiglobalist Naomi Klein popularized Hinkelammerts
thesis in the 1990s, by elaborating on his thoughts concerning iconoclasm and
resistance against capitalism.228
Hinkelammerts heavily politicized theology is directly addressed at what he calls

the bourgeois formalism of capitalism. His book Las armas ideolgicas de la
muerte, published in 1985, is an elaborate attempt to establish a synthesis between
Marxism and Christianity. It was hailed as a new point of departure for liberation
theology. Hinkelammerts main concern is to analyze Max Weber and Milton
Friedman, as they are the key writers for understanding the new ideologies that have
appeared in Latin America since the mid1960s.229
Hinkelammert was the first liberation theologian, who elaborated on the thesis that
capitalism is all about metaphysics and idolatry: a mere ethical critique of
neoliberalism in not sufficient as it excludes the pure religious dimension of
neoliberalism. He argues that modernity is characterized not so much by
secularization as by displacement of the sacred: the bourgeois capitalist project
promises an earthly salvation and sacrifices victims at the market alter. Marxs
fetishism of commodities is revived in Hinkelammert accounts of idolatry: The
problem to be reflected upon is idolatry, the negation of idols as an affirmation of
faith, the necessary illegitimatizing (conscious apostasy) of gods with a feigned
Christian countenance, in whose name the oppression that some humans impose on
others is legitimized.230 The true enemy of theology, as identified by Hinkelammert,
is not atheism but idolatry, as this is presented as the real alternative to faith in God.
He argues that entrepreneurial metaphysics is a metaphysics of commodities, money,
marketing, and capital. The object of devotion of capitalism is to play by the rules of
the free market, which appear as true virtues. By the same token, rebellion is
considered sinful. In Hinkelammerts conception, hubris, arrogance, and pride are
other chief sins against the market. In other words, it is the theologization of
economics, which is the main culprit of poverty around the world.
227
According to Duchrow, prosperity theology is the theological expression and justification of
neoliberalism and has to be rejected as heresy. He moreover argues that its classical form is the neo
Calvinistic understanding of success and wealth as the signs of being elected by God. Duchrow calls
for a processus confessionis in which the church has a key role to play in redirecting the economy to
work for everyone, thus becoming credible witnesses to the God of life. See: Duchrow, Ulrich (2002),
The Economic State Were In: Can the Economy Work for Everyone? Studies in Christian Ethics, 2,
p. 39.
228
Klein, Naomi (2000), No Logo, London: HarperCollins. According to Klein, marketing gurus use
religious rhetoric and have effectively become branding evangelists.
229
Hinkelammert, Franz (1985), The Ideological Weapons of Death: A Theological Critique of
Capitalism, Maryknoll, New York: Orbis.
230
Hinkelammert, Franz (1980), The Economic Roots of Idolatry: Entrepreneurial Metaphysics; in:
Araya, Victorio (1983), The Idols of Death and the God of Life, Maryknoll, New York: Orbis, pp.
106 and 167.
114
The second most recurring theme in Hinkelammerts theology is the concept of

sacrifice, or the sacrificial nature of the freemarket economy. Sacrifice is the
hermeneutic key to a better understanding of aggressions against humankind,
including poverty, colonialism, the destruction of indigenous cultures and the external
debt servicing of developing countries. According to Hinkelammerts worldview, the
resulting death is not a real death, but a service to life. Death has therefore become an
ideological weapon, serving a greater cause, even a service to God.231 He traces the
origins of death mysticism to Bernard of Clairvaux, who regarded the death of
Christian soldiers during the Crusades, as an act of giving glory to God. As a
consequence, the killing of infidels could be done with a clear conscience.
According to Hinkelammert, the modern version of this mystic of death can be applied
to the workings of the free market. Nowadays, it appears as institutionalized violence,
a systematic violation of socioeconomic, political and environmental rights.
Hinkelammert argues that the representatives of the global financial status quo, such
as the US Federal Reserve and the IMF, are using the same arguments as once used
by Bernard de Clairvaux. For example, IMF structural adjustment programs seek
justification for labor layoffs and cuts in overall governmental subsidies for the
poorest in order to balance the monetary budgets, supposedly needed to achieve
economic growth. In a critique of neoliberal theology, Hinkelammert speaks of value
inversion: injustice happens in the name of the poor, as if it were an act of love of
neighbor. He argues, for example, that US wars against Iraq and Afghanistan and
NATOs Kosovo war violated human rights in the name of human rights.232 Human
sacrifice is presented as having intrinsic salvific value. Hinkelammert concludes that
the neoliberal theology has hijacked and inverted the real evangelical values of human
dignity and solidarity.
One of the economic issues, which Hinkelammert extensively examines throughout

his works, is the question of foreign indebtedness of developing countries.
Hinkelammert argues that foreign debt is a tool to suppress development or liberation
of the impoverished nations. He is not interested whether developing countries are
capable of paying off the debt, but rather whether the debt should be paid at all. For
Hinkelammert, external debt servicing by developing countries is todays most visible
dimension of ongoing colonialism, it is the Moloch sucking the blood of the poor.233
A Christianity of resurrection and hope is inverted into a belief of power and blind
law enforcement. In his interpretation, theology has become an ideological tool in
service of the dominant system.
As the new millennium and the Jubilee Year 2000 were approaching, Hinkelammert
argued that the debt should be forgiven. The rationale behind forgiving is that debt
servicing was keeping developing countries poor. Hinkelammert relates debt
forgiveness to the biblical tradition of Jubilee, which was proclaimed every fifty
years. In an analogy with biblical times, he argues that also now debt should be
231
Hinkelammert, Franz (1989), La Fe de Abraham y el Edipo Occidental, San Jos, Costa Rica:
DEI.
232
Hinkelammert, Franz & Ulrich Duchrow (2004), Property for People, Not for Profit: Alternatives
to the Global Tyranny of Capital, London: Zed, p. 43.
233
Hinkelammert, Franz (1988), La Deuda Externa de America Latina: el Automatismo de la Deuda,
San Jos, Costa Rica: DEI.
115
canceled so impoverished countries could regain freedom. In the context of the Old
Testament, God does not represent the creditors or debtors: He is the God of the
conditions of life for all, and for this reason, he is the God of the interruption of the
processes of indebtedness.234
Hinkelammert oversimplifies the question of indebtedness. Several development

economists, including Jeffrey Sachs have called for canceling debts for the most
impoverished nations, especially in Africa.235 However, forgiven debt for most Latin
American countries, to which Hinkelammert is mostly directing his analysis, makes
little sense. He avoids discussing how these debts came around in the first place. It is
important to realize that in the late 1960 and early 1970s, most Latin American
countries heavily criticized the direct involvement of multinationals in their domestic
economies. Instead of allowing direct participation, governments opted for borrowing.
The philosophy behind borrowing was to get rid of dependency, which was the
catchword of the time. Debt servicing became unsustainable because of the
subsequent oil crises in the late 1970s. Equally disruptive was the fact that successive
corruptionrife Brazilian governments spent gigantic foreign loans to finance white
elephants, ranging from the trio of Angra nuclear power plants to the Itaipu hydro
projects. Irresponsible lending in the 1970s has led to the socalled lost decades of the
1980s and 1990s. Only after the turn of the millennium, once highly indebted
countries such as Mexico and Brazil managed to overcome the debt burden. Both
countries are rapidly becoming netcreditors in the global financial markets due to
sophisticated macromanagement, a powerful upsurge in the global liquidity and
booming commodity prices. The main problem therefore is not indebtedness per se
but accountability and poor governance. On the moral side of the equation, pushing
for debt forgiveness increases the dilemma of moral hazard: why should supranational
agencies or investment banks lend funds to sovereign nations if they can never be sure
that their funds will be returned? Developing countries need to develop reputations as
responsible borrowers.
Hinkelammert also avoids discussing the financial roots of the debt crisis and rather
resorts to a conspiracy theory. He argues that the language of the Our Father prayer
was altered, explicitly to serve bourgeois interests. Both the Catholic and Protestant
churches altered the language from forgive us our debts to forgive us our
offenses.236 Such changes were instigated by capitalist forces as neoliberals feared
that Christian forgiveness would challenge the status quo of the current economic
system.237 For Hinkelammert, such antitheology or inversion of liberation
theology is dangerous. Neoliberalism should therefore be condemned as a dangerous
sacrificial system, a modernday Moloch, an idol of death.238
234
Hinkelammert, Franz (1999), El Huracn de la Globalizacin, San Jose, Costa Rica: DEI
Coleccin Economa Teologa, Costa Rica.
235
Sachs, Jeffrey (1999), A Millennial Gift to Developing Nations, New York Times, June 11.
236
Hinkelammert, Franz & Hugo Assmann (1989), A Idolatria do Mercado. Ensaios sobre Economia
e Teologia, Petrpolis, Rio de Janeiro: Editora Vozes.
237
Leonardo Boff also argued that the Our Father, including the line forgive us our debts, is part of
the divine effort to bring about the integral liberation of humanity. See: Boff, Leonardo (1983), The
Lords Prayer, Maryknoll, New York: Orbis.
238
Araya, Victorio (1983), The Idols of Death and the God of Life, Maryknoll, New York: Orbis, p. 191.
116
In his later writings, Hinkelammert elaborates on how neoliberalism defends itself, by

distinguishing between two types of argument. On the one hand, neoliberals resort to
the writings of Adam Smith, who defended the market on moral grounds. On the other
hand, neoliberals make use of the argument articulated by Hayek that capitalism is
driven by Nietzsches will to power and Darwins survival of the fittest. According to
Hinkelammert, the first argument can be rejected by pointing at inner contradictions
present in Smiths writings. Hayeks cynical capitalism can be rejected by revealing
the lethal and suicidal consequences of such theory for concrete life.239 According
to Hinkelammert, liberal economic theory erroneously assumes that freemarkets tend
toward perfect equilibrium. The assumption leads to the devastating conclusion that
direct humanitarian action to bring about socioeconomic justice is unnecessary and
even counterproductive. As if we all can pursue our selfinterest with a clear
conscious because Adam Smiths invisible hand will resolve imbalances. According
to Hinkelammert, the liberal myth has led to the idolatry of the market, in which the
commandment of lovethyneighbor is kidnapped or inverted.
Hinkelammert also borrows heavily from insights originally elaborated at the

Frankfurt School. He criticizes the fact that neoclassical economic theory is based
only on instrumental rationality. Mainstream bourgeois economics, in his viewpoint,
is only interested in personal taste or preferences, while mostly ignoring vital needs.
The blind pursuit of efficiency and unfettered competition leads to human and
environmental destruction. Hinkelammert argues that the instrumental rationality of
price theory should be subordinated to life reproduction rationality. In Marxist
terminology, the exchange or market value must be subordinated to use value or the
utility of producing life. In other words, rationality must be directed to vital life
reproduction.
In 1995, Hinkelammert developed the thesis that capitalism has transformed itself
from a reformist or developmentalist to a wild or savage stage. In the 1960s,
Latin America experienced a period of capitalism with a human face which was
characterized by import substitution, the creation of a welfare state and strong public
investment schemes. According to Hinkelammert, such experiment ended in the
1970s with the rise of Milton Friedmans total capitalism or neoliberalism. The
era that followed was characterized by the Structural Adjustment Programs of the
IMF, Ronald Reagan and Margaret Thatchers antiinterventionism, antireformism
and antipopulism. Hinkelammert defines the notion total market as a worldwide
capitalist system which operates as a totality in its attempt to control and include all
aspects of the market and all consumers thereof. As a totality, it rejects all other
market arrangements or concepts and operates in an aggressive manner to control the
world market place.240 Hinkelammert has not changed his politicaltheological
viewpoints after the implosion of the Soviet empire. He argued that with the fall of
the wall, capitalism was free to let fall its mask and to abandon any pretense of
wearing a human face. He argues that in the world that is depicted in the media
today, there is but one lord that rules over one empire that covers and encloses the
entire world. There is therefore no place of refuge. The conclusion for Hinkelammert
is that the crisis of socialism has deeply wounded the Third World and
239
Hinkelammert, Franz (2001), Der Schrei des Subjekts, Lucerne: Exodus, p. 321.
240
Hinkelammert, Franz (1985), The Politics of the Total Market, Its Theology and Our Response,
North and South Dialogue, Washington D.C.: EPICA.
117
simultaneously threatened the very survival of humanity.241 He moreover argues that

since the demise of communism, theology finds itself in an apocalyptic situation: In
such situation there are no visible ways out and there can be no concrete projects for
change. In a rather pessimistic perception of current affairs, Hinkelammert argues
that mankind is witnessing a mysticism of death and a celebration of collective
suicide.242 Such assessment seems rather dramatic.
According to Hinkelammert, the liberation theologys hermeneutic mediation claims

that the only appropriate response to idolatry is resistance. Christianity should
therefore fund resistance to capitalism in order overcome the socalled vicious cycle
of imperialist terror.243 Targets of resistance are the World Bank, the International
Monetary Fund and the Group of Eight. Liberation theologians have interpreted this
call to action in several ways. It has not always been easy to draw a line between
preaching against armed battle and arguing simultaneously that conflict cannot be
sublimated or denied. This paradox has been at the core of the liberation struggle in
Central America in the 1980s. This occurred most poignantly in Nicaragua, where the
bishops took the unprecedented step by declaring that the people had the right to join
in the revolutionary struggle in the wake of the overthrow of the General Anastasio
Somoza by the Sandinistas in 1979. For Hinkelammert, all we can do is resist as best
we can, and remember the words of Marek Edelman, one of the leaders of the
Warsaw ghetto uprising in 1944: It is better to do something than to do nothing.244
According to Ivan Petrella, Hinkelammerts solution is inadequate: If the idol is the
only available option it is not really an idol but becomes necessary: it becomes a god.
To show the idol as idol, alternatives are needed. Criteria must be able to distinguish
between viable options. A key problem, therefore, lies in the lack of viable
options.245
In sum, Hinkelammerts antagonistic analysis confuses social with moral obligation.

His ethics of resistance, which entails continuous and constant conflict resolution and
class struggles, sounds outdated and stands in opposition to other liberation
theologians, who emphasize a language of reform and reconciliation. His claim that
whoever condemns the attacks on New York also has to condemn the strategy of
globalization that is directed towards the increase of capital property is ludicrous.246
Hinkelammert moreover erroneously tries to make us believe that money is merely a
proxy for profit, corruption, and exploitation. From occasional cloudbursts of scorn,
Hinkelammert often employs apocalyptic, outright attacks to what he perceives as
liberal conspiracy of the Western establishment. Commenting that democratic
capitalism is an illusory and manipulative tool of the status quo sounds empty as he
241
Hinkelammert, Franz (1993), The Crisis of Socialism and the Third World, Monthly Review,
JulyAugust.
242
Hinkelammert, Franz (1989), Economa y Teologa: Las Leyes del Mercado y la Fe, Pasos, 23,
pp. 110.
243
to the Global Tyranny of Capital, London: Zed, p. x.
244
Hinkelammert, Franz (1993), The crisis of socialism and the third world, Monthly Review, July
August.
245
Petrella, Ivan (2004) The Future of Liberation Theology: an Argument and Manifesto, Burlington,
Vermont: Ashgate, p. 11.
246
to the Global Tyranny of Capital, London: Zed, p. 134.
118
refuses to present alternative. His claims that the empire is everywhere and that the
consciousness of an alternative is lost are overtly naive.247 It is rather tragic to
believe that there are no alternatives.
Hinkelammerts worldviews are a long cry from the social teachings of the Catholic
Church. By projecting the economic system into the stratosphere of mysticism, as if it
is a central object of devotion to whose will all human being must confirm, he
misses out on the practical dynamics of the freemarket system.248 His interpretation
that the neoliberal dogma follows the path of virtue, in which dissenters are
condemned as heretics and sinners, seems ludicrous. He stops short of presenting
concrete solutions or feasible strategies. His aspirations toward equality and justice
are therefore dangerously utopian as they lack any clear sense of how to get there. His
magic solution is actioninsolidarity, but he fails to provide concrete insights on
how to establish such strategy.249 Economic history teaches us that state planning
cannot channel natural generosity toward common prosperity. His rhetorical exercises
make him a poor discussion partner in the business ethics debate. Hinkelammert
writings therefore only deserve attention in the aesthetics debate, which focuses on
religious imagery used in capitalist societies. His musings on capitalist idolatry might
be appealing for branding marketers and ideologists, but can hardly be used by
pastoral workers at the practical level.
4.1.4. The Role of the Congregation for the Doctrine of the Faith
Up until now, this study has examined the central tenets of liberation theology by
focusing on the CELAM conferences and the writings of three key representatives.
The CELAM documents are especially important as they chronologically show how
liberation theology rose to eminence and how its influence eventually started to wane.
Even more crucial for liberation theologys decline than the CELAM, however, has
been the Congregation for the Doctrine of the Faith. With the election of Pope John
Paul II in the late 1970s, the Congregation headed by Joseph Cardinal Ratzinger
became a leading actor in the dialogue with the liberation theologians. In the next
section, I will show that the Congregation was well ahead of the curve in pointing at
the sloppy intelligence and often faulty judgments of liberation theologians. It is
worth revisiting the two key instructions as they prophetically anticipated the fall of
the evil Soviet empire and even the rise of Pentecostalism throughout the Americas.
247
Hinkelammert, Franz (1994), Change in the Relationships between Third World Countries and
First World Countries; in: Abraham, K.C. & Bernadette MbuyBeya (1994), Spirituality of the Third
World: A Cry for Life, Maryknoll, New York: Orbis, pp. 1011.
248
Richard, Pablo (1980),The Idols of Death and the God of Life: A Theology, Maryknoll, New York:
Orbis, p. 165.
249
Hinkelammert elaborates on these notions in: (1996), El Mapa del Emperador: Determinismo,
Caos, Sujeto and (1995), Cultura de la Esperanza y Sociedad Sin Exclusin, San Jose, Costa Rica:
DEI.
119
4.1.4.1. Libertatis Nuntius (1984)
The first major cracks in the edifice of liberation theology appeared in 1979, during
Pope John Pauls trip to the New World. Soon afterwards, the influential Jesuit
General Pedro Arrupe warned against Marxist tendencies within liberation theology:
Although Marxist analysis does not directly imply acceptance of Marxist philosophy
as a whole and still less of dialectical materialism as such as it is normally
understood, it implies in fact a concept of human history, which contradicts the
Christian view of man and society and leads to strategies which threaten Christian
values and attitudes. He correctly concludes that the consequences of such attitude
are devastating: Christians, who have for a time tended to adopt Marxist analysis and
praxis, have confessed they have been led bit by bit to accept any means to justify the
end.250
Within a few years, the Congregation for the Doctrine of the Faith picked up on
Arrupes warning by promulgating its Instruction on Certain Aspects of Liberation
Theology.251 The rationale behind issuing a dogmatic intervention was to warn
Christians of the inherent risk of uncritically accepting Marxism as a dominant
epistemological tool in conducting theology. The instruction elaborates on the popes
address to the Latin American Bishops at Puebla in 1979. In the introduction, the
Congregation argues that the Gospel is a message of freedom and a force for
liberation. This message has become the object of reflection for theologians, with a
new kind of attention, which is itself full of promise. It defines liberation first and
foremost as liberation from the radical slavery of sin. The root of such evil lies in
free and responsible persons who have to be converted by the grace of Jesus Christ in
order to live and act as new creatures in the love of neighbor and in the effective
search for justice, selfcontrol, and the exercise of virtue (IV15). The end and goal
of liberation is to obtain the freedom of the children of God, which is the gift of
grace. Such understanding automatically leads to a growing commitment for
freedom from many different kinds of slavery in the cultural, economic, social, and
political spheres, all of which derive ultimately from sin, and so often prevent people
from living in a manner befitting their dignity. The Congregation warns however that
an indispensable condition for any theological reflection on liberation is to discern
clearly what is fundamental to this issue and what is a byproduct of it. It argues that
liberation theologians have erroneously tempted to emphasize, unilaterally, the
liberation from servitude of an earthly and temporal kind. By putting liberation from
sin in second place, and therefore failing to give it the primary importance it is due,
liberation theologians have caused confusion. The purpose of the instruction is
therefore to draw the attention of pastors, theologians, and all the faithful to the
deviations, and risks of deviation, damaging to the faith and to Christian living, that
are brought about by certain forms of liberation theology which use, in an
insufficiently critical manner, concepts borrowed from various currents of Marxist
thought. A specific instruction is deemed necessary as the serious ideological
deviations tend to betray the cause of the poor.
250
Arrupe, Pedro (1981), Marxist Analysis by Christians, Origins, April 16, p. 692.
251
Congregation for the Doctrine of the Faith, (1984) Libertatis Nuntius, Vatican, August 6.
120
Although the expression theology of liberation is a thoroughly valid term, the

Congregation argues that the doctrinal frontiers of theologies of liberation are badly
defined, as several, often contradictory ways of understanding the Christian meaning
of poverty and the type of commitment to justice can be distinguished (3). The
Congregation calls upon theologians to deepen certain essential biblical themes with
a concern for the grave and urgent questions which the contemporary yearning for
liberation. Such task brings us a theology of liberation correctly understood. In the
first place, it calls for a contemporary interpretation of the radical experience of
Christian liberty, which necessarily is the first point of reference. The Gospel
message calls for freedom from sin and from slavery to the Law and to the flesh,
which is the mark of the condition of sinful mankind. For the Congregation, it is the
new life of grace, fruit of justification, which makes us free (4).
Next, the Congregation examines developments within liberation theology, which

propose a novel interpretation of both the content of faith and of Christian existence
that seriously departs from the faith of the church and, in fact, actually constitutes a
practical negation. It particularly refers to concepts uncritically borrowed from
Marxist ideology and notions from biblical hermeneutics marked by rationalism,
which are corrupting whatever was authentic in the generous initial commitment on
behalf of the poor (6). It warns that the mythical fascination for the supposedly
scientific Marxist analysis is not necessarily scientific at all. The Congregation
argues that the borrowing of a method of approach to reality should be preceded by a
careful epistemological critique, which is critically missing in more than one currents
of liberation theology. The attempt to integrate Marxism which is characterized by
atheism and the denial of the human person, his liberty and rights into theology will
necessarily lead to terrible contradictions: This misunderstanding of the spiritual
nature of the person leads to a total subordination of the person to the collectivity, and
thus to the denial of the principles of a social and political life which is in keeping
with human dignity (7). From the hermeneutic viewpoint, the Congregation laments
the uncritical a priori adoption of Marxist categories of interpretation. The partisan
conception of truth, the socalled revolutionary praxis, and classist viewpoint, as
determining principles and pastoral guidelines, are based on a false illusion, too
often leading to a political rereading of the Scriptures. The Congregation moreover
argues that the ecclesial base communities often lack the necessary catechetical and
theological preparation as well as the capacity for discernment (11).
In sum, the Congregation attacks the poorly managed merger between Marxism and
Christianity, which liberation theologians have sought to arrange, as intellectually
inconsistent and theoretically indefensible. The Gospel and the words of the prophets
cannot be confused with the proletariat of Marx, as it would lead to disastrous
consequences: They pervert the Christian meaning of the poor, and they transform
the fight for the rights of the poor into a class fight within the ideological perspective
of the class struggle (9). The Exodus story cannot be reduced to political liberation
and structures of sin are not only to be found in the political, social and economic
structures but also in human hearts.
The first instruction caused uproar among liberation theologians. Not long after the
promulgation, the priests Miguel DEscoto and Ernesto Cardenal, were ordered to
leave office in the Nicaraguan Sandinista government, where both served as minister
121
of foreign affairs and culture respectively.252 Several liberation theologians, especially

Brazils Leonardo Boff, criticized the Instruction as having missed the point.
According to Boff, Marxism can be employed as a theological strategy to related
theology to economics as it recovers the significance of a contingent, historical, and
political base for socioeconomic facts.253 He moreover argued that Marxism is a
principally European theme. In Latin America, the big enemy is not Marxism, it is
capitalism.254
The Uruguayan Juan Luis Segundo (19251996) was equally unimpressed by the
Vatican. The Jesuit, who obtained his licentiate in theology in Louvain in 1956,
accuses the Vatican to have issued a document that explicitly attempts to be
negative, the greatest negative force possible. He deplores the fact that Cardinal
Ratzinger presents liberation theology as immanentist, as if salvation can be obtained
inside history. Segundo moreover denounces Ratzingers real but covert agenda is to
reject the conclusions of the Second Vatican Council and place the postconciliar
period under suspicion.255 Segundo here remains stuck in the position adopted in
1974, when he argued that the theological crux for Latin America is its choice
between capitalism and socialism.256
Along the same controversial line, Joel Kovel does not understand why the
magisterium is suffused or obsessed with the notion that Marxism is either
incipiently or actually taking over the Liberation Theology movement and turning it
to its sinister purposes. Kovel questions the point of this curious diatribe, which
at first glance appears to be a largely imaginary threat. He therefore concludes that
the instruction is not more than a coarse caricature of Liberation Theology.257
Gregory Baum was even more radical in his rejection of the infamous instruction:
Ratzingers Instruction offers a caricature of Marxism, more than that, it presents the
wholly unbelievable thesis that those who accept certain aspects of Marxism
inevitably assimilate, whether they tend to or not, the entire Marxist problematic. He
therefore concludes that the Instruction is a meanspirited and devious ecclesiastical
252
The Jesuit Fernando Cardenal was in charge of the Sandinista literacy program.
253
Boff, Leonardo (1984), Vatican Instruction Reflects European Mindset, Ladoc, August 31. Not
long after criticizing the Vatican instruction, Leonardo Boff himself was scrutinized by Cardinal
Joseph Ratzinger, who used to be his professor. On September 7, 1984, Boff appeared before the
Cardinal to respond to inquiries regarding doctrinal errors in his book Church, Charism and Power. On
March 11, 1985, the Congregation for the Doctrine of the Faith issued a notification that his book was
doctrinally deficient. Leonardo Boff was asked to maintain a year of silentium obsequiosum on the
questions raised in the book.
254
Washington Post (1984), Brazilian Priest Feels Exonerated After Vatican Trip, September 22.
255
Segundo, Juan Luis (1985), Theology and the Church: A Response to Cardinal Ratzinger and a
Warning to the Whole Church, New York: Winston Press, p. 153.
256
Segundo, Juan Luis (1974), Capitalism Socialism: A Theological Crux; in: Gutirrez, Gustavo
& Claude Geffr (editors), The Mystical and Political Dimensions of the Christian Faith, New York:
Herder & Herder, pp. 105123.
257
Kovel, Joel (1986), The Vatican Strikes Back; in: Tabb, William (editor), Churches in Struggle:
Liberation Theologies and Social Change in North America, New York: Monthly Review Press, p.
172 and p. 178. In the same text, Kovel argues that the shabbiness of Instruction is no ground for
complacency among Marxist. A historically momentous transformation is therefore being
contested within the Catholic Church, in which Marxism is in a position to play an active role.
History, however, would soon prove that Kovels argument was completely off the mark.
122
document. For Baum, the unnuanced repudiation of the class struggle leaves hardly
any room for the churchs official teaching of preferential solidarity.258
Even with the benefit of hindsight, it seems that Kovel and Baums arrogant
dismissiveness and virulent opposition to the magisterium was rather flawed and
surprising both from the theoretical and practical viewpoint. However, it would take
several more years before radical leftwing theologians would detach from their
Marxist inspirations.
4.1.4.2. Libertatis Conscientia (1986)
As the debate was not yet settled in political, theological and ecclesial circles, the
magisterium felt the need to address the issue one more time. The Congregation again
addressed liberation theology twenty months later in 1986, by promulgating an
Instruction on Christian Freedom and Liberation.259 There exists an organic
relationship between the two instructions. Whereas its first instruction focused on the
deficiencies and dangers of conducting liberation theology, the second instruction
defines the authentic Christian approach to freedom and liberation. The main
objective of the second instruction is to present the principal theoretical and practical
aspects of freedom and liberation. The application to different social, political and
economic contexts is delegated to the local churches (2).
The Congregation then reiterates the validity and relevance of the central tenet of
liberation theology: love of preference for the poor. It affirms that those who are
oppressed by poverty, should indeed be the object of a love of preference on the
part of the church, which since her origin and in spite of the failings of many of her
members has not ceased to work for their relief, defense and liberation. The
Congregation concludes: The special option for the poor, far from being a sign of
particularism or sectarianism, manifests the universality of the churchs being and
mission. It warns, however, that the church cannot express this option by means of
reductive sociological and ideological categories which would make this preference a
partisan choice and a source of conflict (68). In the fifth chapter, the Congregation
outlines the methodology for a Christian practice of liberation. It claims that the
salvific dimension of liberation cannot be reduced to the socioethical dimension,
which is a consequence of it (71). Radical liberation can only be brought about by a
conversion to Christ: The churchs social teaching is born of the encounter of the
Gospel message and of its demands summarized in the supreme commandment of
love of God and neighbor in justice with the problems emanating from the life of
society. The technical aspects are subsequently judged from the moral point of view.
The moral judgment is essentially orientated toward action and changes in accordance
with the circumstances of history: As an expert in humanity, the church offers by
her social doctrine a set of principles for reflection and criteria for judgment and also
directives for action so that the profound changes demanded by situations of poverty
258
Baum, Gregory (1986), The Catholic Churchs Contradictory Stances; in: Tabb, William (editor),
Churches in Struggle: Liberation Theologies and Social Change in North America, New York:
Monthly Review Press, p. 126 and p. 134.
259
Congregation for the Doctrine of the Faith (1986), Libertatis Conscientia, Vatican, March 22.
123
and injustice may be brought about, and this in a way which serves the true good of
humanity (72).
The most fundamental principle is human dignity, which is intimately linked to the
principles of solidarity and subsidiarity. As the church is obliged to contribute to the
common good of society at all its levels, the magisterium is opposed to all the forms
of social or political individualism. The church is also opposed to all forms of
collectivism, because neither the State nor any society must ever substitute itself for
the initiative and responsibility of individuals and of intermediate communities at the
level on which they can function, nor must they take away the room necessary for
their freedom (73). The churchs criteria for moral judgment are based on the
principles of human dignity and freedom. These criteria are supposed to orientate or
organize economic, social and political life at all levels. According to the
Congregation, institutions and laws, when they are in conformity with the natural
law and ordered to the common good, are the guarantees of peoples freedom and of
the promotion of that freedom (74). Consequently, the Congregation concludes that
one cannot passively accept, still less actively support, groups which by force or by
the manipulation of public opinion take over the State apparatus and unjustly impose
on the collectivity an imported ideology contrary to the culture of the people (75).
These are the basic principles and criteria for judgment, which should inspire general
guidelines for concrete action.
The Congregation also reminds liberation theologians that the Christian will always
prefer the path of dialogue and joint action (77), Revolution or violent disorder are
not the answer: Those who discredit the path of reform and favor the myth of
revolution not only foster the illusion that the abolition of an evil situation is in itself
sufficient to create a more humane society; they also encourage the setting up of
totalitarian regimes (78). The magisterium only admits recourse to armed struggle,
as a last resort to put an end to an obvious and prolonged tyranny, which is gravely
damaging the fundamental rights of individuals and the common good. It warns that
such move can only be contemplated until there has been a very rigorous analysis of
the situation. The magisterium is well aware of the continual development of the
technology of violence and the increasingly serious dangers implied in its recourse.
It is therefore more inclined to promote passive resistance, which is a way more
conformable to moral principles and having no less prospects for success.
Meanwhile, it affirms that one can never approve, whether perpetrated by established
power or insurgents, crimes such as reprisals against the general population, torture,
or methods of terrorism and deliberate provocation aimed at causing deaths during
popular demonstrations (79). In another indictment of liberation theologians
directly involved in revolutionary struggle, the magisterium argues that it is not for
the pastors of the church to intervene directly in the political construction and
organization of social life (80). Such task is delegated to the laity.
At the end of the instruction, the magisterium argues that rich countries have special
responsibilities toward the poorer, including solidarity in aiding the developing
countries, social justice through a revision in correct terms of commercial
relationships between North and South, the promotion of a more human world for all,
a world in which each individual can give and receive, and in which the progress of
some will no longer be an obstacle to the development of others, nor a pretext for
124
their enslavement (90). It moreover argues that world peace depends to a great
extent on international solidarity between peoples and nations (91).
The Congregation concludes that a theology of freedom and liberation is something

urgently needed. However, it warns that it would be criminal to take the energies of
popular piety and misdirect them toward a purely earthly plan of liberation, which
would soon be revealed as nothing more than an illusion and a cause of new forms of
slavery. It laments that those who in this way surrender to the ideologies of the
world and to the alleged necessity of violence are no longer being faithful to hope
(98). Christians are called to strive for authentic liberation, which is liberation from
the most radical evil, from sin and the power of death (99).
In general, liberation theologians have been more receptive to the lines of thought
employed in this second instruction. The tone of the document was set by Pope John
Paul II, who visited Latin America shortly before the document was presented. In
Brazil, the pope stressed that when purified of elements which can adulterate it, with
grave consequences for the faith, [liberation theology] is not only orthodox but
necessary.260 Jacques Van Nieuwenhove, however, remains less supportive of the
Instruction. According to the Belgian theologian, a conservative group among the
hierarchy used the instructions to issue disciplinary measures with the intention of
excluding liberation theologians and their thinking from the theological faculties and
seminaries, of weakening their influence on ecclesial decision making and pastoral
workers, and of undermining their credibility in the eyes of the people. In addition,
he argued that a sharpened control on ecclesially linked publishers and a strict
application of the nihil obstat guarantee the marginalization of liberation theology
publications.261
Other liberation theologians were quickly denying the charge made by the
Congregation that they are accommodating theology to Marxism. Even mainstream
liberation theologians were arguing that that their theology is mainly characterized by
a rejection of capitalism and not by an explicit adoption of Marxist analytical tools of
analysis. Gutirrez responded explicitly to the Vatican documents by reaffirming his
Christocentric, integral understanding of freedom and liberation.262 The central point
made by the Congregation for the Doctrine of the Faith that liberation theology relies
too heavily on Marxism, which results in politicization of faith, loss of transcendence
and future eschatology, has haunted liberation theologians ever since.
Recent history has been on the side of the magisterium. The dream of liberation
theologians that the Latin American church would give a spirit for socialism, as the
Protestant Reformation did to capitalism, turned out to be rather naive. The strength
of the arguments raised by the Congregation in the two instructions, backed by the
authority of Pope John Paul II, has undoubtedly accelerated the declining influence of
liberation theology and waning authority of liberation theologians over parishes and
base communities.
260
Hennelly, Alfred (1992), Liberation Theology: A Documentary History, Maryknoll, New York:
Orbis, p. 513.
261
Van Nieuwenhove, Jacques (1993), Santo Domingo: Exclusion or Inclusion of Liberation
Theology? Louvain Studies, 18, pp. 217242.
262
Gutirrez, Gustavo (1990), The Truth Shall Make You Free, Maryknoll, New York: Orbis.
125
4.1.5. The Future of Liberation Theology
Latin American liberation theology rose to eminence in the 1970s but has lost
momentum ever since Pope John Paul II addressed the crowds and CELAM in
Mexico in 1979. Many reasons can be attributed to its rapid decline. Most critics
argue that liberation theology has been buried under the Berlin Wall in November
1989. During a seminar in Guadalajara, Mexico, in May 1996, Cardinal Joseph
Ratzinger reiterated that the fall of the European governmental systems based on
Marxism turned out to be a kind of twilight of the gods for that theology.263 In Latin
America itself, the electoral defeat of the Sandinistas in Nicaragua and moral
bankruptcy of the Cuban model were also a direct indictment of liberation theology.
Liberation theologians argue that its obituary has been prematurely written by its
enemies. Since the mid1980s, they have tried to cope with the crisis in different
ways. Uruguays Julio de Santa Ana, for example, argues that socialism remains valid
as a social ethics.264 Nicaraguas Xabier Gorostiaga leaves the question surrounding
the relevance of socialism untouched by emphasizing the power of a united South.265
Along the same lines, Costa Ricas Pablo Richard describes the rise of popular
movements as the most positive development. He places high hopes on the
indigenous, AfroAmerican, womens liberation, ecological, alternative agricultural,
popular economy and alternative or traditional health movements as the most
promising actors or builders of a new civil society.266 According to the Jesuit father
Figueroa Deck, there is simply a pause, which can be likened to the silence that
needs to occur in any good liturgy.267 According to Gustavo Gutirrez, liberation
theology is neither in crisis, nor in decline. In a keynote speech delivered at the
Conference on Christianity in Latin America and the Caribbean, he argued:
Liberation theology hasnt died. If it did, I wasnt invited to the funeral.268 In his
perception, liberation theology slowly got incorporated or assimilated into the normal
ways of doing things, like any new insight within a particular field of knowledge. For
Gutirrez, the historical momentum for liberation theology is still there: As long as
there is a group trying to follow Christ among the poor, we will find something like
liberation theology.269
The Belgian theologian Jos Comblin, who works in Brazil, has criticized liberation
theology for failing to address spiritual issues. In his own words: The greatest
263
Petrella, Ivan (2004) The Future of Liberation Theology: an Argument and Manifesto, Burlington,
Vermont: Ashgate, p. 25.
264
De Santa Ana, Julio (1992), La prctica econmica como religin: Crtica teolgica a la economa
poltica, San Jos, Costa Rica: DEI.
265
Gorostiaga, Xabier (1992), Est la respuesta en los pases del Sur? Envo 132, pp. 4655.
266
Richard, Pablo (1994), A Theology of Life: Rebuilding Hope from the Perspective of the South; in:
Abraham, K.C. & Bernadette MbuyBeya (1994), Spirituality of the Third World: A Cry for Life,
267
Figueroa Deck, S.J., Allan (2003), Beyond La Pausa. Liberation Theologies Live, America,
February 3, p. 21.
268
Keynote delivered in So Paulo, July 29 to August 1, 2003.
269
Hartnett, Daniel (2003), Remembering the Poor. An Interview with Gustavo Gutirrez, America,
February 3, p. 15.
126
reproach that can be made against liberation theology is that it has not devoted enough
attention to the true drama of human persons, to their destiny, to their vocation, and
consequently to the ground of the issue of freedom.270 George De Schrijver argues
that an epistemological or paradigm shift has taken place in liberation theology from
socioeconomic towards sociocultural mediations.271 Leonardo Boff has argued that
liberation theology has made the mistake of thinking that its foundations were
anthropological and not theocentric. In recent writings, Leonardo Boff has warned of
the downside of the socalled turn to the subject. In his ecologicallysustainable
spirituality, Boff criticizes anthropocentrism, and warns about the human will to
power.272 Boff defends a new paradigm that takes into consideration the
interconnectedness of the universe and human beings. In his holistic analysis, the
earth is seen as an open, dynamic and evolving system, opposed to a closed system,
which operates according to deterministic laws. For Boff, Francis of Assisi is the ideal
role model for this new paradigm. Boff seems to have turned away from an
anthropocentric liberation theology and moved towards an ecoliberation theology,
which borrows heavily from the deep ecology movement. Not all theologians are
positively impressed by Boffs latest move. According to JohnPeter Pham, a careful
reading of the teachings of Boff the ecospiritualist unveils under a thin veneer of
junk science, paganism, and bad anthropology the same tired political and economic
agenda espoused by Boff the liberation theologian.273
The turn to spirituality, as proposed by Gustavo Gutirrez and Leonardo Boff, is not
enough to overcome the current crisis in liberationist thought. In order to become
more relevant, liberation theology itself should become less exclusive. At the
grassroots level, popular autonomous leadership in Christian Base Communities has
to emerge. Moreover, an air of liberal elitism still permeates the communities. The
preferential option for the poor might be legitimate but should never replace a wider
concern and broader commitment for all of society. The prosperous cannot be taken
as the enemies of God on the one hand, nor can the poorest be understood as the sole
saviors. The poor might have a privileged place of Gods presence (as stressed by
Jon Sobrino) or can be seen as the crucified (as often reminded by Ignacio
Ellacura), but that does not automatically mean that they should be granted
transcendent moral authority.
There is no consensus where liberation theology is heading now. According to Long,

we have not yet witnessed the demolition of liberation theology, but it is inevitable.
He argues that liberation theology probably continues to stand for some reason
extrinsic to its own logic: Some vested interest of publishing companies; or maybe
the consumptive patterns of North American intellectuals are perpetuating this
theology.274 According to George Weigel, liberation theology does not even deserve
270
Comblin, Jos, (1998), Called for Freedom: The Changing Context of Liberation Theology,
271
De Schrijver, Georges (editor) (1998), Liberation Theologies on Shifting Ground: A Clash of
SocioEconomic and Cultural Paradigms, Louvain: Catholic University of Louvain.
272
Boff, Leonardo (1997), Cry of the Earth, Cry of the Poor, Maryknoll, New York: Orbis, pp. 196
202.
273
Pham, JohnPeter (1999), Book Review: Leonardo Boffs Cry of the Earth, Cry of the Poor,
Religion & Liberty.
274
Long, D. Stephen (2000), Divine Economy Theology and the Market, New York: Routledge, p.
115.
127
to be really called an indigenous Third World phenomena as their proponents

imagine it to be: For the truth of the matter is that the theologies of liberation were
largely born in western European faculties of theology and brought back to Latin
America by recentlyminted academics who, having drunk deeply from the wells of
European socialism, now proposed to bring the revolution home, so to speak if in
Spanish and Portuguese, rather than German and French, accents.275 My own
academic and pastoral experiences in Latin America and Europe reach the same
conclusion.
Sirico goes even further than Weigel by arguing that liberation theologians lack a
coherent view of economics or a fundamental understanding of how society functions
and develops.276 In an analysis of the breakdown of the Aristide government in Haiti
in early 2004, he argued that liberation theologians end up with precisely what it
decries most of all: Centralized power exercised on behalf of the few at the expense
of the many. He argues that Aristides rule was despotic not despite his professed
adherence to the theology of liberation but precisely because of it.277 It is important
to remember that Aristide was elected on a liberation theology platform in the early
1990s. The case of Haiti is a typical example of how an intellectual arrangement got
lost between the utopian drawing board and practical implementation. Aristides reign
has resulted in the abuse of power and the loss of innocence. The support given to
Aristides regime is a good example of how liberation theology has transformed itself
full circle: from opposing rightwing dictatorship to blind support for a leftwing
dictatorship.
The politicization of the church by liberation theologies has not only led to the
backing of controversial political regimes but also to an exodus towards Pentecostal
churches. During the fifth general assembly of the CELAM in Aparecida, it has
become clear that not the waning influence of liberation theology but the surging
impact of Pentecostalism should deserve the biggest attention of the church. Although
especially Gustavo Gutirrez and Leonardo Boff have more recently rediscovered the
spiritual resources, they have been structurally undervalued or disregarded for too
long. Liberation theologians in general have been too slow in recognizing personal
anxieties and pastoral needs than the evangelical and Pentecostal churches.
According to liberation theologian Cldovis Boff, the Catholic Church indeed has to
blame itself for losing followers to Pentecostal churches. He cites pastoral
abandonment, for which the Catholic Church is responsible. Although he argues that
there is a lack of personnel and facilities within the Catholic Church, he also admits
problems related to quality. First, he deplores the fact that the church still follows the
traditional parish system and has little pastoral creativity. Next, in terms of quality,
he argues that the Catholic ecclesiastical structures are too cumbersome, too rigid,
too centralized to adapt to these new urban realities and to respond to the new
requirements of the people. In addition, ecclesiastical structures are too rationalized,
in the modern, Weberian sense of the word; this means that they lack the mystical
side, they are not appealing, attractive. They are efficient, but they lack the sacred
275
Weigel, George (2007), Jesus Christ is the Revolution, Washington Post, May 9.
276
Paulist Father Sirico is the president of the Acton Institute for the Study of Religion and Liberty,
which based in Grand Rapids, Michigan.
277
Sirico, Robert A. (2004), When Theory Met Practice, Wall Street Journal, March 19.
128
dimension, the fire, the spirit. The major concerns of the Catholic Church concern
doctrine, orthodoxy, morality, administrative matters. In addition, to these qualitative
problems, Cldovis Boff admits that in Latin America the Catholic Church is too
politicized and not religious enough. For this reason, people seek out other religious
agencies for their spiritual needs. According to Boff, by focusing only on social
aspects the religious needs of the people are neglected so that they are forced to look
elsewhere to find what they are looking for.278 More recently Cldovis Boff has
become even more critical about the achievements of liberation theology: Theology
of liberation started off on the right track but, given its epistemological ambiguity,
ended up by going astray: it put the poor in the place of Christ. A second mistake
resulted from this fundamental inversion: the faith became an instrument for
liberation. Fatal errors, for they jeopardized the good fruits of this opportune
theology.279
By misinterpreting the socioeconomic reality, excessively pointing at the material

needs and by overlooking the emotional and spiritual dimensions of faith, liberation
theologians have actually hastened Latin Americas turn to Pentecostalism. The rise
of Pentecostalism has made clear that liberation theology was too narrowly focused
on class and economic hierarchies, neglecting crucial socialcultural relations, such as
race, ethnicity and gender and the social impact of mass urbanization. It has also made
clear that the Catholic Church has lost a nearmonopoly on faith formation and
education. Instead of demonizing the Pentecostal churches as sects, the pejorative
term often used by liberation theologians, it would be better to take them more
seriously.280 If anything, the rise of Pentecostalism shows the fragility of liberation
theologys own social and grassroots base. Liberation theology has become too
politicized and therefore lost contact with the poorest segments of society. Cldovis
Boff is right by arguing that without a firm and clear theological and spiritual basis,
the Church of the poor will be transformed into a big NGO.281
Syracuse anthropologist John Burdick identifies three key processes and channels
though which Catholic liberationism continues to add to Brazilian counter
hegemony. In the first place, he argues that the involvement in Churchoriented
movements has inspired and prepared individuals to become active in various fields of
social struggle outside of the original institutional context of the Church itself. In the
second place, he argues that the Church does not form generic leaders, but rather
leaders, whose form of action and thought bear the mark of their progressive Catholic
background. This is indeed true for grassroots leaders who for example fight for
affirmative action, rights for landless peasants and the legalization of abortion.
Finally, he argues that the perspectives and practices carried by leaders originating in
278
Boff, Cldovis (2000), The Catholic Church and the New Churches in Latin America, Sedos.
279
Boff, Cldovis (2007), Teologia da libertao e volta ao fundamento, Revista Eclesistica
280
In his analysis of the CELAM assembly in Aparecida, Cldovis Boff still surprisingly refers to
Pentecostal churches as sects. Boff, Cldovis (2007), Repartir da realidade ou da experincia de
f? Propostas para a CELAM de Aparecida, Revista Eclesistica Brasileira, 265, pp. 535.
281
Boff, Cldovis (2007), Repartir da realidade ou da experincia de f? Propostas para a CELAM
de Aparecida, Revista Eclesistica Brasileira, 265, p. 25. This is my translation from the original
Portuguese version.
129
the Church have in fact had an effect on the rank and file of those movements.282 The
very fact that Lulas Workers Party (PT) won the major elections in both 2002 and
2006, despite all major scandals in which the party is constantly involved, shows the
indirect power and impact of liberation theology.283
In sum, liberation theology has failed to make a decisive impact in the church, but it
has made lasting influence on civil society. Whereas the church has coopted some
parts of liberationist vocabulary, its jargon has been more comprehensively
incorporated by grassroots social movements and influential nongovernmental
organizations. Rafael Correa, a former Catholic social worker and holder of a masters
degree in economics of the Catholic University of Louvain, was sworn in as the new
President of Ecuador in January 2007.284 Correa calls himself a Christian leftist and
a devout evangelical Catholic. Correa follows in the footsteps of Venezuelas
President Hugo Chavez, who argues that Jesus Christ was the greatest socialist in
history. Meanwhile in Brazil, liberation theology has decisively influenced the
Landless Workers Movement (MST), the Pastoral Land Commission (CPT) and was
a main driver of the antiglobalization World Social Forum, which first gathered in
Porto Alegre, as a counterweight to the World Economic Forum in Davos.285 It is here
where the intellectual heritage of liberation theology continues to be exposed.
282
Burdick, John (2004), Legacies of Liberation: the Progressive Catholic Church in Brazil,
Burlington, Vermont: Ashgate, pp. 139142.
283
It should be reiterated, however, that Lulas liberation theologyinspired campaign rhetoric in 2002
has not been transformed in concrete policies, at least not at the macroeconomic level.
284
Correa studied economics at the Catholic University of Louvain from 1989 to 1991. He is highly
critical of US influence in Latin America, arguing that Chavezs comparison of US President George
W. Bush to the devil was unfair to the devil. Quoted by: Allen, John (2007), Will Ecuadors New
Leftist Leader Follow the Model of Chavez or Lula visvis the Church? National Catholic Review,
January 16.
285
Berma Klein Goldewijk has eruditely written on the overall impact and legacy but also the latest
trends and tendencies of these new movements. See: Klein Goldewijk, Berma (2002), Dignity and
Human Rights: The Implementation of Economic, Social and Cultural Rights, Antwerp: Intersentia.
130
4.2. North American Neocon Theology
Whereas contemporary Latin American theology has been mostly shaped by intra
ecclesial doctrines and affairs, the most influential contemporary North American
theology has mostly been molded by geopolitical and cultural debates.286 Like
liberation theology in Latin American, the impact of neocon theology has gone far
beyond the traditional confinements of seminaries and theology faculties.
A detailed analysis is more than warranted because neocon theology has entered the
mainstream political landscape in the United States and even dominated the public
debate under the George W. Bush Administration. In order to understand the vast and
widespread impact of neocon theology in contemporary America, this section will
start with a brief examination of its historical roots. Next, the theories of the three
most renowned neocon theologians will be critically examined.
4.2.1. The Rising Influence of Neocons
The current wave of American neocon ideology has to be understood in the wider
tradition of Puritan Nationalism, American Exceptionalism and the Doctrine of
Manifest Destiny. Religious fundamentalism has never been strange to America. Its
foundations were religiously inspired as religious dissenting English Pilgrim Fathers
sailed to the American shores in 1620. The preaching of vulgarized Calvinism or
English Puritanism, in which earning money was considered a sign of divine
predestination, had a huge influence on the Founding Fathers and made a lasting
impact on the American nation. In order to keep sharply diverging Christian factions
and denominations together, the United States created a kind of Protestant
Nationalism, which had to be embraced by all new immigrants. The First Amendment
of the American Constitution is simple: Congress shall make no law respecting an
establishment of religion or prohibiting the free exercise thereof.287 From the outset,
America opted for a strict separation of Church and State. Americas most popular
public holiday, Thanksgiving, has also a strong nationalistic connotation. It was
adopted under George Washington in 1789. His successor, John Adams, in a God
fearing ambiance, even called for a day of fasting and prayer before God.
The current wave of neoconservatism has its roots in the 1960s, when a group now
known as neocons started as a breakaway faction from the Democratic Party. A
splinter group emerged as critics of the liberal establishment in the 1960s, arguing that
the Democrats had lost touch with reality. Leftwing Democrats labeled this splinter
group as neo to distinguish them from the real conservatives. A neocon is therefore a
person who is raised on the political left but grew dissatisfied with its ideas. The
typical neocon, however, continues to believe in the principle of compassion and
desire to help, which historically is more characteristic of people on the political left.
In the words of the godfather of neoconservatism, Irving Kristol, a neocon is a liberal
286
This is not to say that feminist and black liberation theology had no impact or adepts in North
America.
287
Feldman, Naoh (2005), Divided by God: Americas ChurchState Problem and What We Should
Do about It, New York: Farrar, Straus and Giroux.
131
whos been mugged by reality. In the 1970s, the neocons regarded the Soviet empire
as a grave threat, a threat that many liberals did not fully understand. The early
neocons argued that the dominant liberalism was too selfincriminating to recognize
serious threats. In the early 1990s, the second generation of modern neocons is
completely Republican. Neocons worked together in the Christian Coalition, which
engineered the Republican takeover of Congress in the 1994 election. Under the
Clinton Administration, the Communitarians brought the neoliberals and neocons
together by arguing that the debate should focus on civil responsibilities, not rights. In
this vision, the State is becoming less and less important as individuals are confronted
with their duties towards society, not what society owes me. Communitarianism in
the 1990s convinced people to make fewer demands on the government, which was
regarded as dangerously invading into the lives of businesses, communities, and
families.
The neocon lobby has also benefited from the dramatic shift in balance of power,
away from the Eurocentric eastcoasters WhiteAnglo Saxon Protestants towards the
Sunbelt conservatives or reborn Christians in the South. Nowadays, religious
expressions of neoconservatism are to be found across the religious landscape,
including most Christian denominations such as Roman Catholicism, Protestantism
and Pentecostalism. The socalled revivalist business evangelicals, inspired on radical
Calvinism, preach that a commitment to increase wealth is a duty, based on a sense of
calling. They have in common a heavy emphasis on regular Scripture reading,
traditional family values, piety, holiness, church attendance, missionary zeal and
witnessing. Revivalist business evangelicals also set aside a reasonable part of their
disposable income for their church community. Their work ethos could be called
Puritan or Calvinistic as attention focuses on diligent work, responsibility,
accountability, steadfast regularity, ambition, passion for innovation, and
improvement. Commitment to increase wealth is promoted as a sense of duty, driven
by a religious asceticism, and based on a sense of calling. Typical Latin American
moral qualities such as luck, heroism, and status are downplayed. Moral clarity is
considered a key virtue, unlike international diplomacy, which is regarded as a waste
of time and resources.
4.2.2. Theology as Language of Legitimation
Contemporary neocons were not the first in recognizing the importance of theology in
the economics debate. Max Weber first developed the importance of bestowing
legitimacy to business enterprise. His assessment of capitalism is far from uniformly
positive. He argued that once capitalism becomes divorced from its original religious
impulses it turns into an iron cage from which we are unable to extricate ourselves.
He describes the fate of the modern man in terms as bleak as his motivational
foundations are mechanized. More than a century after he first published his thesis,
Max Webers thesis is still hotly debated among sociologists, but also increasingly in
circles of theologians and economists. An ongoing fascination for Weber is related to
the fact that he was the first one to emphasize that culture is a main engine of world
historical change. George Weigel, for example, argues as follows: History is driven,
over the long haul, by culture by what men and women honor, cherish, and worship;
by what societies deem to be true and good, and by the expressions they give to that in
132
language, literature, and the arts; by what individuals and societies are willing to stake
their lives on.288 This viewpoint challenges the assumption those Marxists and
liberation theologians, who regard economics and politics as the main agents of
change.
Daniel Bell resurrected the writings of Max Weber in the mid1970s. In his widely
acclaimed masterpiece The Cultural Contradictions of Capitalism, he argued that
there is a crisis of legitimacy in business institutions that ultimately stems from a loss
of religious values. He stressed that capitalism is slowly being undermined because
the Protestant ethic is no longer a significant influence in the modern culture. Along
the same lines as Weber, Bell argues that an innerworldly asceticism has
dangerously alienated from its religious roots. Bell observes that the ascetic element,
which was a kind of moral legitimation of capitalism in its early days, has virtually
disappeared.
The success of one generations asceticism has tempted later generations away from
the Protestant ethic towards hedonism and materialism. Pleasure and a focus on
immediate gratification have become acceptable as the modern American way of life.
According to Bell, the free market will ultimately be undermined by its own
successes: the wealth created by the work ethic eventually makes people want to work
less. Bells warning that capitalism without a soul would lead to a deep moral crisis
awakened theologians, which saw a new urgency in restoring the capitalist ethos with
theological foundations. The claim that theological foundations are essential for a
wellfunctioning economy made a comeback in the early 1970s. In Bells own words:
I believe that a culture which has become aware of the limits in exploring the
mundane will turn, at some point, to the effort to recover the sacred.289
The next section will elaborate on the lines of thought and examine the viewpoints of
contemporary leading neocon theologians. These theologians have in common a
belief that theology has an essential role to play in the economics debate. The
theological themes, which they introduce into the debate, are directly related to each
other and fit comfortably within the model of freemarket capitalism and political
liberalism. First, the writings of Michael Novak will be examined. He was the most
wellknow neocon in the 1990s. His specific contribution to the debate is the explicit
use of theology as language of legitimation for the freemarket model. Next, the
viewpoints of John Richard Neuhaus will be analyzed. He is the most vocal
representative of the neocon school of thought in the 2000s. Finally, the writings of
George Weigel will be highlighted. These three Catholic neocons are also referred to
as theocons.290
4.2.2.1. Michael Novak
The most outspoken contemporary defender of restoring the theological foundations

of the freemarket model is Michael Novak. Not since Adam Smith has liberty and
288
Weigel, George (2003), Their European Problem... and Ours, The Third Annual William E. Simon
Lecture, November 20.
289
Bell, Daniel (1976), The Cultural Contradictions of Capitalism, New York: Basic, p. xxix.
290
Linker, Damon (2006), The Theocons: Secular America under Siege, New York: Doubleday.
133
free markets been as passionately defended as in his writings. Novaks main objective
is to provide a theological underpinning of Adam Smith, Ludwig von Mises and
Friedrich Hayek, whose main thesis is that virtuous selfinterest results in the
maximization of liberty.291
Novak has gone through a number of transformations, yet his theme has remained
regular: the quest for liberty as our cultures most cherished value.292 Novak
declared himself a radical in the late 1960s. In one of his earliest books, he
criticized the American way of life by condemning consumers freedom. He argued
that the system in America as it has been perceived by its young people as racist,
counterrevolutionary and militarist. During the Vietnam War, Novak was admired by
students and protesters. Unlike his later writings, he argued that against armed ranks
of policemen, a grenade is more serious and effective than calling names. With
regards to the church, he argued that its language and its methods are in fact, too
narrow and parochial.293 At this stage, Novak believed in socialism because its
ostensible ethical and economic system seemed superior to capitalism.
In these early writings, Novak argued that the main problem with Latin America is its
Catholic nature: If Latin Americans shared the ethos, the virtues and the institutions
of the Japanese, they would assuredly be among the economic leaders of the
world.294 For Novak, Latin America is humanistic, courteous, genteel, flirtatious and
festive, but also relatively changeless, impressed with power (and especially with the
power of the state), familycentered, suspicious of the individual, less concerned with
material advance than with noble feelings and a sense of culture. North America, by
contrast, is defined as a culture based on economic liberation that the way out of
poverty is invention and established institutions, customs, habits and educational
methods that encouraged practical inventiveness by every means possible.295 Novak
applies the same logic to explain the socioeconomic backwardness of Afro
Americans: the emotional nature of black Protestantism created a welfare mentality,
which in itself can be seen as modern version of slavery. The fact that culture is a
major driver for economic change and advancing prosperity is crucial for a clear
understanding of Novaks writings.
In the early 1980s, Novak started to articulate a theology commensurate with the
novelty of the New World. He worried that North America was falling behind Latin
America in producing its own brand of theology: Latin Americans, given their
intense contemplative and speculative tendencies, as opposed to the practical,
empirical temper of North Americans, have risen to this theoretical challenge in an
291
Michael Novak was born in Pennsylvania in 1933 into a Roman Catholic family of Slovakian
descent. As a seminarian, he studied at Romes Gregorian University but was not ordained. He served
as a freelance journalist at the Second Vatican Council and became a professor in religious studies in
Stanford in 1965. He currently holds the George Frederick Jewett Chair in Religion and Public Policy
at the American Enterprise Institute.
292
Novak, Michael (1978), The American Vision: An Essay on the Future of Democratic Capitalism,
Washington, D.C.: American Enterprise Institute for Public Policy Research, p. 58.
293
Novak, Michael (1969), A Theology for Radical Politics, New York: Herder & Herder, pp. 11, 69
and 74.
294
Novak, Michael (1984), Freedom with Justice: Catholic Social Thought and Liberal Institutions,
San Francisco: Harper & Row, p. 174.
295
Novak, Michael (1986), Will It Liberate? Questions about Liberation Theology, New York:
Paulist Press, p. 4.
134
admirable fashion. According to Novak, they challenge the North Americas to do

the same. At the same time, however, Novak warns that Latin American theology is
dangerously becoming a Christian reinterpretation of Marxism and socialism.
Novaks main preoccupation is what would happen if Catholicism would bless
Marxism: if these two powerful symbolic forces end up joining hands, what would
be the fate of civil liberties? Novak here correctly points at the treacherous
relationship between communism and theology, which dangerously exploded in
Central America in the mid 1980s. What Novak instead proposes is the American
model: what is missing in Latin America is a theology of enterprise, of commerce, of
economic dynamism in short, of capitalism.296
According to Novak, economics is fundamental, and yet prior to economics is

politics; prior to politics is culture; and at the root of culture lays formal public
worship, embodying beliefs about God and man in dramatic form (cult, in its primary
sense).297 In his later works, Novak stresses the crucial importance of ethos in the
economic development and cultural advancement of a society. Novak argues that the
ideal version of a human society is based on the principles of a democratic capitalism,
which is characterized by a trinity of systems. In the first place, an incentivesbased
freemarket economy, which fosters economic growth, social mobility, and self
reliance. Secondly, political liberty, which should be based on pluralism and
democracy. In the third place, a moralcultural system, which is pluralistic and liberal
in nature and buttressed by the mediating structures of family, church, and other
voluntary associations such as universities and the press. This third level is moreover
based on the free exercise of conscience and free flow of information and ideas.298
Novak further elaborates on the trinity of systems in The Spirit of Democratic

Capitalism (1982). In this impressive study, he attempts to establish the intellectual
and moral groundwork for the embrace of capitalism with moral integrity. Throughout
the 1980s, this book was the object of spirited debate. The intellectual establishment
in the United States and Western Europe sometimes appreciated, but mostly disdained
Novaks approach as there was a near consensus among academics that Christianity
was the religion of which socialism was the practice. Neuhaus regards Novak as a
premature antisocialist.299 According to Novak, the moral foundations of the
capitalist welfare state are weak. The benefits of the welfare state are far too easily
obtained, as they are too attractive to resist: We come to feel (by a multitude of
rationalizations) that the state owes us benefits, that we are as entitled to them as
anybody else, and that we would be foolish not to take what is so abundantly offered,
whether we need it or not. For Novak, the welfare state is a corruption with perverse
effects on the wider society: Given approval solely in the name of the poor, the
benefits of the welfare state go mainly to the wellorganized middle class, while the
condition of the disorganized very poorest often deteriorates.300 In Novaks
296
Idem, p. 3 and p. 14.
297
Novak, Michael (2000), Capitalism and the Human Spirit, Public Interest, 139.
298
Novak, Michael (1982), The Spirit of Democratic Capitalism, Lanham, Maryland: Madison, p. 41.
299
Neuhaus, Richard John (1992), Doing Well and Doing Good: The Challenge to the Christian
Capitalist, New York: Doubleday, p. 49. This might sound right within the Catholic Church, but
definitely not in the world of economic science. Ludwig von Mises and Friedrich Hayek, to name only
two, had long before buried socialism. From the philosophical viewpoint, Adam Smith had also refuted
all rational arguments for socialism.
300
Novak, Michael (1994), The Crisis of the Welfare State, IPA Review, 4.
135
worldview, the role of the State ought to be minimized as much as possible. In other
words, the chief objective of the State is to advance liberty and prosperity, and not to
redistribute wealth and income.
Novak also warns against the usage of the term social justice, which can be vague and
is often rather misleading: It becomes an instrument of ideological intimidation for
the purpose of gaining the power of legal coercion. Novak argues that the rise of the
concept of social justice coincided with two other shifts in human consciousness: the
socalled death of God and the belief that governments are capable of conducting
society in a fair and equitable manner. Scientific socialism is to blame for the over
reliance on social justice projects. According to Novak, the misappropriation of the
concept of justice by the left has had terrible consequences for society. By making
responsibility an external quality, no individual can be held accountable for his
relative position. According to Novak, social justice rightly understood has two
dimensions. First, the skills it requires are those of inspiring, working with, and
organizing others to accomplish together a work of justice. Second, it aims at the
good of the city, not at the good of one agent only. Inspired by Hayeks writings,
Novak envisions a society in which governmental interference is kept at its lowest
level possible. For Novak, social justice has to be ideologically neutral, as open to
people on the left as on the right or in the center, and operating in the field of
literature, science, religion, economics, culture and other areas of human social
activities. In his own words, social justice is a virtue, an attribute of individuals, or it
is a fraud.301
Novak challenges the economic and political assumptions made by liberation

theologians as rather naive. He challenges the liberationist assumption that
underdeveloped countries are dominated by the capitalist system. According to
Novak, Latin American economies are governed by a mercantilist and quasifeudal
economic system, not by pure capitalism: The present order is not free but statist, not
mindcentered, not open to the poor but protective of the rich. Large majorities of the
poor are propertyless. The poor are prevented by law from founding and incorporating
their own enterprises.302 In other words, poverty in the South is related to pre
capitalist structures. Poverty is not oppression, but lack of economic opportunity. In
other words, the problem is not capitalism, but lack of capitalism. Novak seeks the
answer to underdevelopment and misery in cultural, moral, and legal support for the
creation of an entrepreneurial society. Novaks outspoken position on
underdevelopment is backed up by recent empirical studies and shared by renowned
development economists, including Lawrence Summers, Dani Rodrik and Hernando
De Soto.303
301
Novak, Michael (2000), Defining Social Justice, First Things, December.
302
Novak, Michael (1986), Will It Liberate? Questions about Liberation Theology, New York:
Paulist Press, p. 5
303
Harvard Professor Dani Rodrik expressed his views at a seminar organized by the Faculty of
Economics of the Catholic University of Louvain in October 2002, entitled Institutions, Integration,
and Geography: In Search of the Deep Determinants of Prosperity. The Peruvian economist
Hernando de Soto has conducted extensive studies on property rights in developing countries. His
conclusions regarding wealth creation through strong legal frameworks that protects and enforces
property rights are consistent with Novaks position. See: De Soto, Hernando (2000), The Mystery of
Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, New York: Basic.
136
Novak has based his rejection of socialism not only on economic or philosophical
arguments, but interestingly also on theological ones. According to Novak, socialism
was a social variant of sin. It failed as a social institution as it could not inspire love
or creativity. Socialism is destined to die because of its inadequate hold on the
human spirit. Novak argues that democratic capitalism rests on a complex theory of
sin.304 He bases his account of original sin or anthropology of liberty on the Stoic
doctrine of unintended consequences, the moral viewpoints of Adam Smith and
Reinhold Niebuhr. He argues that original sin is the only Christian teaching for which
faith is not necessary because it is so amply confirmed in human history. Humankind
is bound by original sin and moral weakness to such extent that perverse
consequences can result from mans best intentions. Original sin requires prudence, as
mans morally good deeds do not necessarily correlate with morally good
consequences. The Achilles heel of democratic capitalism is that it has appealed so
little to the human spirit. He claims that this is a failure of the intellect. Novak
claims that its successes in the political order and in the economic order undermine it
in the cultural order: the more it succeeds, the more it fails. He warns of corruptions
of affluence: moral discipline yields successes, but success corrupts moral discipline.
The systems ironical momentum therefore heads toward hedonism, decadence.305
Novaks interpretation resembles the position of Daniel Bell.
Novak also correctly warns against the power of adversary culture, which emphasizes
on equality of results and moral relativism. Novak particularly discards Richard
Rortys cheerful nihilism, which holds that metaphysics should be rejected as there
is no room for objective, eternal, absolute, moral standards by which human deeds
should be measured.306 Instead, Novak defends the argument that a society should be
driven by virtuous selfinterest, which includes religious, moral, artistic and
scientific interests, and interests in justice and peace. The notion selfinterest
encodes a view of human liberty that far exceeds selfregard, selfishness,
acquisitiveness, and greed.
Novaks theological interpretation of original sin is intrinsically related to his vision

of cocreation.307 He argues that a transcendental leap is necessary because otherwise
man might be tempted to think that his cocreative power enables him to make
socialism feasible: The Lord God could have created a perfect world, but did not. He
allowed for the disobedience of Adam and Eve and all the rest of us. It is therefore our
vocation to bring the good things of creation, which are never perfect to fruition. []
Just as God did not make the world perfect, but shot through with contingency,
failure, error, evil and malice, so the Catholic Church has seen Gods governance as
304
Novak, Michael (1982), The Spirit of Democratic Capitalism, Lanham, Maryland: Madison, p.
186.
305
Idem, pp. 3135.
306
Novak, Michael (1993), The Catholic Ethic and the Spirit of Capitalism, New York: The Free
Press, pp. 195197. Richard Rorty died in June 2007, at the age of 75.
307
Thomas Aquinas, who argued that Gods abundant goodness allows humankind to exercise co
creative power, first established the concept of cocreation. For Aquinas, cocreation is based on
certain substantive principles of natural law that direct human actions toward virtuous ends. Key
applications of this principal include the usury proscription, the just wage and the theory of the
universal destination of all goods.
137
Providence, as Prudence.308 For Novak, God refused to create a perfect world by

giving humankind the vocation to make it better.
Novak also applies the concept of cocreation to the functioning of a corporation,

which he describes as a voluntary association where people come together with a
common goal, providing them with a sense of meaning and purpose. A corporation is
a private social instrument, which should operate independently of the state, for the
moral and material support of other activities of civil society, such as supporting
research, the arts, universities, and other philanthropic works. It is a social invention
that springs from the acts of its founders who work to provide goods and/or services
at a profit with fiduciary care for the investments entrusted to it. By pursuing such
noble goals, a corporation occupies a primary position in the building of the main
alternative to the state, namely, civil society. The corporation is essential as it
enhances the social good in several ways by means of job creation, production of
goods and services; by making a profit, it creates wealth that did not exist before. In
Novaks worldview, a corporation is not only a vital pillar for political liberty and
freemarket capitalism but also a cocreator for complementing or participating in the
work of the Creator. He argues that a business corporation is a much despised
incarnation of Gods presence in the world.309 His contention to equal a corporation
with Gods incarnation requires more explanation.
Novak convincingly holds that cocreation, driven by wit, invention, discovery and
enterprise, is the primary cause of higher development and the wealth at the
economic, social, political, cultural and moral levels. The cocreation model is
bottomup: the lessdeveloped have to become masters of their own socioeconomic,
political and moralcultural destiny. In other words, to help the poor is to help each
person exercise his right to personal economic initiative. Cocreation is therefore
directly correlated to entrepreneurism. Novak offers several practical proposals that
should be embraced by lessdeveloped countries. The most important ones include
legal recognition of personal economic initiative; better access to credit lines; tax
incentives for home and land ownership; incentives for stock ownership and
employee stock ownership plans; and strong copyright and patent laws. All these
elements are indeed decisive for the emergence of capitalism in developing
countries.310
In his book The Catholic Ethic and the Spirit of Capitalism (1993), which is clearly
inspired on Max Weber, Novak tries to redefine Catholic social ethics. Novak puts a
lot of effort in arguing that not only the Protestant ethic contributed to the rise of
capitalism.311 The main contention is that Catholicism has unfairly been placed in the
shadow of the Weber thesis on the Protestant ethic: A democratic capitalist society
308
San Francisco: Harper & Row, pp. 28 and 32.
309
Novak, Michael (1997), The Fire of Invention: Civil Society and the Future of the Corporation,
New York: Rowman & Littlefield, pp. 3741.
310
Novak, Michael (1990), Toward a Theology of the Corporation, Washington, D.C.: The
American Enterprise Institute Press, p. 39.
311
Novaks argument that the origins of capitalism are to be located in Catholicism, and that the
CounterReformation, not the Protestant Ethic, was responsible for the translocation of capitalism
was originally formulated by Hugh TrevorRoper (1967), Religion, the Reformation and Social
Change, and Other Essay, London: Macmillan.
138
is, in principle, uncommitted to any one vision of a social order.312 JudeoChristian

virtues might survive and even flourish under democratic capitalism but they certainly
have no monopoly. In other words, not only Protestantism but also Catholicism or
other religions can be compatible with capitalism. Novak presents six benchmarks,
which he regards as essential for the capitalist ethos: the dignity of the human person;
the interdependence of all people; the economic development of all nations; an
institution of human rights; a communitarian personality; and the vocation of each
human being to become a cocreator with God.313
According to Novak, the Protestant ethic might have inspired economic dynamism,
material betterment, but it was Catholic delight in the goodness of creation that mostly
encouraged economic creativity, ingenuity and inventiveness. Weber was blind to the
distinctly Catholic contribution to capitalism. Weber erroneously assumed that the
Benedictine ideal of worldly withdrawal remained the only mode of Catholic
asceticism. Novak convincingly argues that medieval Cistercian monasteries were the
most economically effective units and drivers of medieval economic growth. The
mendicant orders such as the Dominicans and Franciscans introduced lay Catholics
to the rhythms of apostolic life, taught them to cherish holiness in their daily work,
and inspired them to perform that work perfectly for God.314 According to Novak,
benchmarks for capitalism are typical but not a monopoly of the JudeoChristian
tradition. Novak unconvincingly concludes that the highest form of democratic
capitalism is best exemplified in the American Republican experiment, which is based
on a special interaction between religion, politics, and economics.315
In the 1990s, Novak started to criticize the fact that economics and business faculties
were picturing their disciplines as belonging to the realm of sciences instead of liberal
arts. People educated in the humanities and social sciences have therefore become
uncritically anticapitalist, thinking of business as vulgar, philistine, and morally
suspect. Novak quotes a survey showing that prior to 1965, television shows
portrayed businessmen as good guys twice as often as bad guys. In the 1970s,
meanwhile, this ratio was reversed two villains for every good guy.316 According to
Novak, these immoral and sometimes criminal connotations are disastrous for
corporations. He condemns Hollywood for pretending that business people are
morally derelict and plays down the other accusation heard from artists and academia
that business people are boring. In a rather abrupt intellectual turn, Novak proposes a
return to moral leadership or moral reawakening, which is a battle against
312
Besides Novak, many other theologians dispute the claim that Catholicism is economically
backward and/or ideologically inferior due to its theological nature. According to Schall, Spanish
Jesuits pioneered a way to modify the medieval prohibition on usury, which had somehow become the
symbol of the Catholic failures to grasp the nature of the modern commercial world. See: Schall, SJ,
James V. (1982), Catholicism, Business, and Human Priorities; in: Williams, Oliver & John Houck
(editors) (1982), The JudeoChristian Vision and the Modern Corporation, Notre Dame, Indiana:
University of Notre Dame Press, p. 118.
313
San Francisco: Harper & Row, p. 218.
314
Novak, Michael (2005), Max Weber Goes Global, First Things, May.
315
The French politician, traveler, and historian Alexis de Tocqueville famously described this
interaction in his report on the Founding Fathers. His book Democracy in America, published in
1835, is a widely influential study of American institutions.
316
Novak, Michael (1996), Is Business a Calling? Across the Board, July/August, p. 41.
139
permissiveness and lax moral standards. Business ought to be seen as a calling or

vocation.317
In his book Business as a Calling, presented as a handbook for Catholic business

people, Novak convincingly criticizes Friedmans claim that the sole responsibility of
a firm is to maximize profits. Unlike Friedman, who compares business to a game,
Novak argues that the point of business is to accomplish something collectively, to
make a contribution to society, to do something which is of value, to provide
something unique, to test a persons talents and character, to build community.
Unlike Friedman, Novak argues that a corporation is a moral entity, which ought to be
addressed in unambiguously moral language.318 Novak argues that there ought to be
more to business than maximizing profit, since there is more to life than having. For
Novak, if democratic capitalism does perish, it will not be because its economic
system produced a lesser prosperity or because its political system permitted a lesser
range of liberties and civilities. According to Novak, democratic capitalism only will
fail when its cultural leaders too poorly defend its moral ideals.319
In one of his latest book entitled The Universal Hunger for Liberty: Why the Clash of
Civilizations Is Not Inevitable, Michael Novak elaborates on the thesis of Samuel
Huntingon and Francis Fukuyama. Novaks main thesis is that racial and religious
differences that divide the world into clashing cultures are nowadays less important
than the primary hunger for personal dignity. Like other neocons, Novaks no longer
focuses on the challenges posed by secularization. Novak convincingly argues that
scholars are no longer obsessed with the secularization thesis, which holds that
advanced societies will become ever less religious, ever less interested in God.
Novaks sharp analysis points at the renewed religious fervor, which undoubtedly is
making a comeback on the global stage and academic debate alike. Following the
thesis of Pope Benedict, Novak persuasively argues that secularism cannot offer a
legitimate answer to moral relativism and moral decline. It moreover has no feasible
answer for cultural reawakening and moral renewal.320
The answer for Novak resides in the notion of the Christian vocation. Business should
also be interpreted in the wider sense of a work of social justice. According to Novak,
not only the church but also business corporations should be regarded as sources of
moral teaching. Businesses, especially small businesses, are schools of cross cultural
cooperation, habits of teamwork and self discipline. Novak ends his book on yet
another interesting note. He convincingly argues that in order to reach a global moral
vision, one should not try to discover the lowest common denominator possible to
which everybody can agree. This kind of consensus building would drifts too far away
317
Novak, Michael (1996), Business as a Calling: Work and the Examined Life, New York: Free
Press.
318
Besides profit maximization, Friedman argues that business executives should conduct business in
accordance with their desires, which generally will be to make as much as possible while conforming
to the basic rules of society. According to Friedman, such basic rules of society, include both those
embodied in law and those embodied in ethical custom. in: Friedman, Milton (1970), The Social
Responsibility of Business is to Increase Its Profits, New York Times Magazine, September 13.
319
Novak, Michael (1980), Irony, Tragedy, Courage, The SmithKline Forum for a Healthier
American Society 1, p. 4.
320
Novak, Michael (2004), The Universal Hunger for Liberty: Why the Clash of Civilizations Is Not
Inevitable, New York: Basic.
140
from an ideal society. For Novak, each different cultural tradition, with its own ways
of expressing common ideals, should be respected as it contains significant, valuable
insights.
4.2.2.2. Richard John Neuhaus
The most influential voice of the neocon school of thought in the 2000s is Richard
John Neuhaus.321 As a Lutheran convert to Catholicism, Neuhaus has particularly
written on the specific Catholic contribution to the business ethics debate. Whereas
Novaks intention is to offer a theology of economics, the main concern of Neuhaus is
to think theologically about the free society, and about the free economy that such a
society requires.322
Since the early 1980s, Neuhaus has been arguing that the Protestant mainline has
become the oldline and is fast becoming the sideline. According to Neuhaus,
mainline or liberal Protestantism, such as the Presbyterian, the Episcopal and United
Methodists churches, is in the doldrums, as measured by cultural influence, morale,
membership and institutional vitality. According to Neuhaus, the decline of mainline
Protestantism in the United States does not automatically imply that Catholics and
Evangelicals will gain in influence. However, he argues that the Catholic Church has
effectively turned out to be the premier institutional champion of humanism and
reason in the contemporary world. True humanism, he contends, is not related to
secular humanism or to be confused with reductionist rationalism of the
Enlightenment philosophers, but rather directed toward the transcendent, toward the
ultimate good, who is God.323
Along the same lines as Novak, Neuhaus argues that CST is a critical and constructive
resource for putting the American experiment in liberal democracy on more solid
philosophical and moral foundations. Neuhaus sees new opportunities for
Catholicism. Up until the early 1980s, such endeavor could not have taken place, as
Catholics were too narrowly oriented to defend themselves. Until fairly recently,
Catholicism was not regarded as compatible with the American experiment. Neuhaus
points at the socalled crisis of liberalism, which coincided with the pontificate of
Pope John Paul II, who ended up redefining CST on free and just society. Neuhaus
defends this epistemological shift but wants to go even further. He argues that CST
focus more on the AngloAmerican experience of liberty, rather than the French
revolutionary framework with its bias against religion in general and Catholicism in
particular. Neuhaus project is ambitious as he wants the Catholic Church to be
intellectually and institutionally, the worlds most influential champion of human
321
Richard John Neuhaus was born in Canada and became a prominent Lutheran theologian and pastor
to a black community in Brooklyn, New York during 17 years. In 1991, he left the Lutheran Church
and was ordained a Catholic priest by Cardinal John OConnor of New York. He has been awarded the
John Paul II Award for Religious Freedom and has held influential presidential appointments in the
Carter, Reagan, and first Bush administrations. When President George W. Bush met with journalists
in May 2004, the religious authority he cited most often was Richard John Neuhaus.
322
Capitalist, New York: Doubleday, p. 18.
323
Neuhaus, Richard John (1993), The Truth about Freedom, Wall Street Journal, October 8.
141
freedom. Catholicism proposes a different, more morally compelling, and more

enduring idea of the democratic experiment.324
One of the most interesting points and recurring themes of Neuhaus is his argument
that Christianity is inherently countercultural. The socalled eschatological
resistance is of crucial importance since every culture contains within it the
temptation to commit an act of closure, to assume that it is or that it can become the
culmination of history. Neuhaus warns for a culture, which makes an idol of itself.
His theology therefore tries to be permanently oppositional or dialectic: Always the
now of history and the not yet of eschatological promise, always the sacred
absolute challenging the profanely idolatrous, always the interplay of the critically
affirmative and affirmatively critical.325
According to Neuhaus, capitalism is the economic corollary of the Christian

understanding of mans nature and destiny.326 Marxist ideology, in turn, is described
by Neuhaus as madness to which human beings succumb when they refuse to live
provisionally, which is to say, when they refuse to wait for the promised Kingdom of
God. Like Novak, the agenda of Neuhaus is driven by a conviction that it is too
simple to condemn leftwing clerics as hypocritical. Leftwing clerics rail against
capitalism from which, through the generosity of capitalists, they derive their
living.327
Neuhaus moreover argues that consumerism is, quite precisely, the consuming of life
by the things consumed. It is living in a manner that is measured by having rather than
being. As Pope John Paul II makes clear, consumerism is hardly the sin of the rich.
The poor, driven by discontent and envy, may be consumed by what they do not have
as the rich are consumed by what they do have. The question is not, certainly not most
importantly, a question about economics. It is first and foremost a cultural and moral
problem requiring a cultural and moral remedy.328 Neuhaus convincingly identifies
consumerism not as an economic but primarily as a cultural and moral problem. The
underlying problem is the tension between authentic human freedom and possession
of material goods.
Neuhaus also follows Novak in his controversial belief that the United States of
America has a special vocation on the global stage. Neuhaus elaborates on the notion
that the Divine Providence guides America. Such belief is deeply entrenched in the
nations history ever since it proclaimed independence from the United Kingdom.
Neuhaus is one of the leading theologians pushing for the comeback on the belief that
America is providentially guided.329 In his understanding, America should understand
324
Grasso, Kenneth; Gerard Bradley & Robert Hunt (editors) (1995), Catholicism, Liberalism, &
Communitarianism, New York: Rowman & Littlefield, p. xi.
325
Neuhaus, Richard John (1998), The Extraordinary Politics of Alien Citizens, First Things,
June/July.
326
Neuhaus, Richard John (1991), The Pope Affirms the New Capitalism, Wall Street Journal,
May 2.
327
June/July.
328
Capitalist, New York: Doubleday, pp. 5253.
329
Webb, Stephen (2005), American Providence: A Nation with a Mission, First Things, February.
142
itself as an experiment offering the hope of a novus ordo seculorum.330 He

unconvincingly argues that during the pontificate of Pope John Paul II, for the first
time, magisterial teaching about modernity, democracy, and human freedom has a
stronger reference to the Revolution of 1776 than to the French Revolution of 1789.
A particular reference to the American experiment, however, is not a valid argument
to justify a special vocation of America. According to Neuhaus, Americas
understanding of individualism is commensurable with the constituting ideas of the
American experiment: The state is understood to be in the service of freedom, and
freedom is understood as what the Founders called ordered liberty liberty ordered
to the truth. Americas Declaration of Independence should therefore be understood
as a moral argument: As in one nation under God, meaning a nation under
judgment. Christians understand and publicly declare that higher sovereignty in the
simple proposition, Jesus Christ is Lord.331
At the same time, Neuhaus warns that it is dangerous to treat Americas universal
mission as a manifest destiny and Americas way of life as a civil religion.
Despite the constant danger of idolatry, Neuhaus nevertheless seems convinced that
the Founding Fathers made a brilliant mix of ideas based on the Scottish
Enlightenment and Calvinist Christianity. He calls the result a PuritanLockean
Synthesis. Such constitutional order of social contract encompassed by covenantal
purpose and obligation provides a meaning system or a plausibility structure of
American moral discourse, both at the personal and public level.332
Despite these caveats, Neuhaus surprisingly rejects unilateralism as the ideal policy in
international relations. Like Novak, he rather puts his money on American military
prowess: policies should be understood as a determined internationalism based on
the indispensability of American leadership and the morality of pursuing the national
interest it being understood that the national interest should be pursued, as much as
possible, in cooperation with others, and that, for America, the national interest is
inseparable from advancing moral goals such as democracy and human rights.
Neuhaus sees in this policy shift a return to the Niebuhrian insight that leftist dreams
of a world rationally harmonized beyond conflicts of interest reflect a dangerous
sentimentality.333 Neuhaus concludes that the American experiment is worthy of
our devotion. Such devotion is not based on the awareness that America is home, but
by the awareness that America is a nation under God, which means, first of all, a
nation under judgment.334 Neuhaus here dangerously mixes theological concepts
such as devotion and vocation with political leadership and militarism.
In neocon fashion, Neuhaus rejects the idea of grand governmental schemes to

address socioeconomic poverty. He downplays the scientific claims of economics:
Economics is often called the dismal science, and many people are inclined to think
it is more an art than a science. Some go further and say that it resembles nothing so
330
331
Neuhaus, Richard John (1997), The Liberalism of John Paul II, First Things, May.
332
333
Neuhaus, Richard John (2001), Morality and Moralism, First Things, October.
334
June/July.
143
much as a kind of superstition. I confess to harboring robust skepticism about

economics as a science. For Neuhaus, economics, politics, and social policy are by
no means the most important questions in life. But they are important. To the extent
that Christians think about them, they should want to think about them
Christianly.335 According to Neuhaus, poverty can never be solved by a topbottom
approach. He downplays the effectiveness of governmental or statist development
policies.
In paraphrasing William Easterly, he argues that overseas development aid too often
boils down to the selling of delusions, of catastrophes, coverups, and corruption
resulting in the bolstering of despotic regimes.336 He regards foreign aid, with all its
pomps, pretensions, and ensconced apparatchiks, as a cruel shell game played at the
expense of the poor and should be terminated. He argues that rich governments
erroneously bear the White Mans Burden and the poor governments suffer from,
or collude in, moral imperialism of the delusions of the rich. A topdown approach
might be wellintended, but eventually is nothing but a destructive delusion.
Instead of relying on utopian proposals to end world poverty, Neuhaus calls for a
radical different approach, which relies on nongovernmental programs, mainly
churchrelated, that are demonstrably effective in countering disease, feeding the
hungry and advancing development by building communities of mutual aid. The
contribution of Neuhaus is that within the seeds of their faith lies the promise of a
societal transformation.
4.2.2.3. George Weigel
The third most influential American Catholic theologian of the neocon school of
thought is George Weigel. He was Pope John Paul IIs de facto official biographer
and is currently a senior fellow of the Ethics and Public Policy Center in Washington,
D.C. The theologian is a charter signatory of the influential neoconservative Project
for the New American Century. This nonprofit initiative was established in 1997 and
is aimed at promoting American global leadership. PNAC describes itself as a
nonprofit educational organization supporting American military, diplomatic, and
moral leadership.337 Weigel defends a theological view of the world because
theological lenses help us to see deeper, farther, and more truly.338
Along the same lines as Neuhaus, his main concern is to foment a dialogue between
Catholicism and, what he calls, the American experiment in ordered liberty. In an
effort to establish a fruitful dialogue, Weigel intends to revamp Catholicism with
transcendental categories. He asserts that the issue is to develop a theological
grammar and vocabulary that can confront secularism and satisfy the (often latent)
religious hungers of the contemporary world, without requiring our contemporaries to
335
Idem.
336
Neuhaus, Richard John (2006), The Empire of Blasted Dreams, First Things, November. See also:
Easterly, William (2006), The White Mans Burden: Why the Wests Efforts to Aid the Rest Have
Done So Much Ill and So Little Good, London: Penguin.
337
For additional information on its history, objectives and policies, see www.newamericancentury.org.
338
Weigel, George (2004), Europes Problem and Ours, First Things, February, p. 25.
144
become medievals [...] and without dissolving Christian truth claims into expressions
of a wholly subjective religious experience.339
Like Neuhaus, Weigel argues that American Catholicism is dynamic and

characterized by a readiness for developing an ethics of wealth creation. According to
Weigel, such growing awareness is typical among immigrant Catholics and has never
been more powerful than in contemporary America. He compellingly argues that the
opportunity must be seized for the benefit of the poor, as well as for the moral
legitimation of the entrepreneur.340 Just like Novak and Neuhaus, Weigel perceives
that America has a special vocation. He borrows heavily from Kagans conventional
albeit controversial images that Americans are from Mars, Europeans from
Venus.341 In short, his thesis is that the United States and Western Europe are based
on a different set of strategic values, which have huge implications for the projection
of power in the quest to secure peace, freedom and prosperity worldwide. He argues
that the ideological divergences with implications for the role of international legal
and political organizations such as the United Nations, the World Bank and the IMF,
bespeak important truths. The impact is immediately visible at the adopted policy
approaches such as the path to peace in the Middle East, the rebuilding of Iraq and the
legitimacy of the International Criminal Court and adoption of the Kyoto Treaty.
Weigel argues that the main problem lies in the fact that so many European public
intellectuals are Christophobic. Here, Weigel makes the point that Europes
foremost problems are related to the virtual collapse of Christianity in its historic
heartland western Europe. This goes against the opinion of philosophers like
Jrgen Habermas and the late Jacques Derrida, who have won popular support for
only a Europe neutral between worldviews (as it) is safe for democracy and human
rights. In return, Weigel argues that these exclusivist humanists have won in part
because of the collapse of Europes Christian communities as effective transmitters of
the faith and effective public advocates for religiouslyinformed moral reason.342 In
his perception, by adopting a Slavic view of history, Europes lack of vision and
soulless secularism can be healed. Weigel here compellingly argues that the
borderlands between Orthodoxy and Catholicism have witnessed a recovery of lost
spiritual and moral values. He quotes Karol Wojtyla, the later Pope John Paul II, and
intellectual leaders of the anticommunist resistance Vclav Havel and Vclav Benda,
are people who all believed that living in the truth could change what seemed
unchangeable in history.343
In his book The Cube and the Cathedral, Weigel argues that Europe is dying from
spiritual boredom: If Europe does not rediscover its faith in reason and its faith in
the God of the Bible, I fear that its belowreplacementlevel birthrates will continue,
and much of the continent will eventually become an extension of the ArabIslamic
339
Weaver, Mary Jo & Scott Appleby (1996), Being Right: Conservative Catholics in America,
Bloomington: Indiana University Press.
340
Myers, Kenneth (1988), Aspiring to Freedom, Grand Rapids, Michigan: Eerdmans, p. 69.
341
Kagan, Robert (2003), Of Paradise and Power: America and Europe in the New World Order,
Random House.
342
Weigel, George (2005), The Next Pope...and Why He Matters to All of Us, The Fourth William E.
Simon Lecture, April 4.
343
Weigel, George (2005), The Cube and the Cathedral: Europe, America and Politics without God,
Basic.
145
world.344 Weigels claims looks a little farfetched if one looks beyond birthrates. In
his devout America, three times as many woman of childbearing age have their
pregnancies terminated than in secularized Germany. Overall, divorce rates are also
much higher in the United States than in Germany and France. Weigels conception of
how Western Europe has forgotten God and instead got diverted to atheistic
humanism has triggered a debate not only at the academic level but also in European
parliaments.
According to Weigel, the Catholic Church is wellplaced to overcome atheistic

humanism and secularism because it is the most influential religious community
of the past ten decades in shaping the world. He holds that the Catholic Church has
been decisively formed for the next century by John Pauls authoritative interpretation
of the Second Vatican Council. Weigel regards Pope John Paul II as the most
important religious event of this century. This does not mean, however, that Weigel
uncritically accepts the Pope John Pauls writings. Like Neuhaus, he criticizes any
leftwing tendency in the popes writings. Weigel argues for example that the popes
worries about environmental pollution in his encyclical Laborem Exercens are
empirically questionable. He moreover laments the popes vigorous defense of free
associations of workers. Although he affirms the popes endorsement of solidarity,
he laments the encyclicals failure to discuss the ways in which unions in free
economies can become status quo institutions weakened.345 Not without reason,
Weigel laments the fact that the encyclical Sollicitudo Rei Socialis was influenced by
Catholic intellectuals and activists who did believe in moral equivalence between
the blocs, and the enduring influence in the Curia of Paul VIs Ostpolitik and its
evenhandedness between East and West. For Weigel, too many leftist ideas found
their way into the encyclical.346
Despite these criticisms against Pope John Pauls contributions to CST, Weigel is
mostly a staunch supporter of the Polish pope. Weigel convincingly argues that Pope
John Paul IIs socalled substantive experiment gave a richer phenomenological
and theological texture, which was crucial to defeat the false humanism of the
freedom of indifference.347 He emphasizes that freedom detached from moral truth is
selfcannibalizing. Such freedom of indifference dominates the high culture of
the triumphant West. Weigel convincingly argues that here the Catholic Church has
an important role to play as freedom untethered from truth is freedoms worst
enemy. The same holds true on the economic front: Unless a vibrant public moral
culture disciplines and directs the explosive human energies let loose by the free
market, the market ends up destroying the culture that makes it possible. Moreover,
a society of unprecedented material wealth and equally unprecedented license, the
virtues necessary for the market to work selfcommand, the willingness to defer
gratification, the talent for teamwork, the skill of prudent risktaking atrophy. MTV,
not the Federal Trade Commission or the International Monetary Fund, is the true
enemy of the free economy. Weigel compellingly argues that official CST should act
344
Weigel, George (2006), Attempt to Introduce the God With a Human Face, Zenit News Agency,
December 19.
345
Weigel, George (1999), Witness to Hope: The Biography of Pope John Paul II, New York:
HarperCollins/Cliff, p. 421.
346
Idem, p. 560.
347
Weigel, George (1999), John Paul II and the Crisis of Humanism, First Things, December.
146
as a magnet drawing the intellectual debate into more fruitful channels of inquiry and
reflections.348
In a 2006 Rome lecture on Centesimus Annus and Deus Caritas Est, Weigel
elaborated on the question of underdevelopment and business ethics. He underscored
that no program of statesponsored assistance or massive philanthropic endeavor can
ever replace individual acts of compassion. According to Weigel, hundreds of
billions, perhaps trillions, of aid dollars have been squandered by despotic African
governments or stolen by kleptocratic African government officials over the past forty
years. In his view, Africa could easily fall off the edge of history into a continental
oblivion that would forever scar the conscience of humanity. He warns that to
suggest that the answer to Africas crisis of crises is to set justice against charity and
to privilege governmental aid programs over other forms of aid is to be willfully blind
to the history of the late twentieth century. For Weigel, only nongovernmental
organizations, especially churches, have shown themselves capable of promoting the
kind of changed behavior that drives down the incidence of AIDS. In other words,
setting justice against charity is a prescription for injustice and a guaranteed method
for muffling the sense of fellowfeeling and obligation that gives rise to charity in all
its forms, large and small. For Weigel, setting justice against charity reinforces the
instinct of all modern states, including democracies, to absorb every facet of social
life into themselves. It is moreover a conceptual barrier to imaginative thinking
about publicsector/independentsector partnerships in dealing with complex
humanitarian emergencies like crisisridden Africa. Weigels main contention is that
more charity and private initiatives, not governmentsponsored initiatives provide the
best answer to underdevelopment.349 The assumption deserves some merit but avoids
the complexity of issues related to underdevelopment.
Weigels criticism against Statesponsored or multilateral topdown initiatives should

be placed in a wider context. The most notorious position taken by Weigel is his
attack of the Christian notion of nonviolence. Like other neocons, Weigel is a tireless
scold of those theologians who are supposedly deluded enough to think that the
Churchs teaching includes a presumption against war. He criticizes the notion that
pacifism is what he calls the new default position in contemporary Catholic
commentary on war and peace. He argues that this new attitude amounts to a
functional pacifism that mistakenly imagines itself an authentic development of the
just war tradition.350 According to Weigel, the presumption against violence is
dubious from the historical, methodological and theological viewpoint: Its effect in
moral analysis is to turn the tradition insideout, such that warconduct in bello
questions of proportionality and discrimination take theological precedence over what
were traditionally assumed to be the prior wardecision ad bellum questions: just
cause, right intention, competent authority, reasonable chance of success,
proportionality of ends, and last resort. Weigel argues that such inversion explains
why in much of the religious commentary after the terrorist attacks of September 11,
348
Grasso, Kenneth; Gerard Bradley & Robert Hunt (editors) (1995), Catholicism, Liberalism, &
Communitarianism, New York: Rowman & Littlefield, p. 258.
349
Weigel, George (2006), From Centesimus Annus to Deus Caritas Est: the Free and Virtuous
Society of the 21st Century. Lecture delivered at a conference hosted by the Acton Institute at the
Pontifical Gregorian University in Rome on December 12.
350
Weigel, George & Paul Griffiths (2002), Just War: An Exchange, First Things, April.
147
2001, considerable attention was paid to the necessity of avoiding indiscriminate

noncombatant casualties in the war against terrorism, while little attention was paid to
the prior question of the moral obligation of government to pursue national security
and world order, both of which were directly threatened by the terrorist networks.351
Novak and Weigels justwar rhetoric has not felt on deaf ears inside the beltway.
Weigel equally continues to justify the US occupation of Iraq from a neocon
perspective. Whereas several senior Bush Administration officials are openly starting
to voice criticism, Weigel calls Bush to remain focused on the legitimate, indeed
noble, goal of supporting the development of a decent, selfgoverning society in an
Iraq that could augur a better future for the Middle East. According to Weigel, a
Tetlike victory for the jihadists will not lead to a just peace, in Iraq or anywhere
else.352 Weigels scorning of nonviolent resistance, like Neuhaus and Novaks
mocking of pacifism, in not shared by Pope John Paul II.353 Weigel ignores the fact
that Pope John Paul II repeatedly warned against the use of force in Iraq in the months
before the war in 2003. Several senior Vatican officials have bluntly termed the
proposed American war on Iraq both illegal and immoral. The fact that Church
leaders also have supported the possibility of conscientious objection is also ignored
by Weigel.354 Pope Benedict XVIs has consistently followedup on Pope John Paul
IIs indictment of the war but this has also fallen on deaf earns in the neocon camp.
The neocon position on Americas war on Iraq should therefore be condemned as
inconsistent with official CST.
4.2.3. The Future of Neocon Theology
For much too long, European academics, politicians and theologians have failed to
appreciate or hold in low esteem the writings of North American neoconservative
theologians. Commentators have undervalued or disregarded the fact that neocons
have rather successfully pursued their stated objective to roll back the influence of
liberalism and secularism in American public affairs. Neocons have also succeeded in
establishing a powerful and influential rightwing counterweight to leftwing media by
creating a huge infrastructure of think tanks, policy institutes, and media outlets, both
at the national and local levels that promote their policy frameworks.355 If we look at
their influence on Wall Street and Main Street, it can also be concluded that neocons
have successfully managed to promote a set of values drawn from JudeoChristian
orthodoxy that shapes the values, ethics, and morality of business.
351
Weigel, George (2003), Moral Clarity in a Time of War, First Things, January.
352
Weigel, George (2006), Baghdad 2006 = Tet 1968? Washington, DC: Ethics and Public Policy
Center, November 29.
353
Neuhaus, Richard John (2001), Just War is an Obligation of Charity, National Catholic Register,
October 7.
354
Only in 2004, 110 US soldiers filed for conscientious objector status. Only half of those requests
were granted. See: Allen, John (2006), Catholic Soldiers Face No Crisis of Conscience on War, Bush
Official Says, National Catholic Reporter, October 10.
355
Leading think tanks include the American Enterprise Institute, Empower America, Ethics and Public
Policy Center, Hoover Institution, Hudson Institute, Institute for Religion and Democracy, Institute on
Religion and Public Life, and the Manhattan Institute.
148
The rise to eminence of neoconservatism in the United States has also defied
scientists who claimed not too long ago that modernization would lead to
secularization, as has mostly been the case in Europe. The political landscape in the
United States, like in Latin America and the Middle East, has undoubtedly witnessed
a return to the sacred. The neocon influence became paramount with the advent of the
George W. Bush Administration. Neoconservatives became the backbone of his
government after the September 11 terrorist attacks on the World Trade Center and
the Pentagon. This tragic event marked the shift away from Bushs original
compassionate conservatism towards neocon politics. According to the neocon
mindset, the terrorist acts on American soil were a result of insufficient American
involvement and ambition and not, as many defended, a payback for US
imperialism. The solution, as proposed by the neocons, was to be more expansive
in defining goals and more assertive in its implementation.356
According to the neocons, the United States has a special vocation to manage a so
called unipolar world. They argue that after the implosion of the Soviet empire, the
United States is morally obliged to use its military might to defeat the forces of evil
and overcome chaos. Fukuyamas end of history and Huntingtons clash of
civilization theses furthermore inspired the neocons.357 The underlying idea is that
multilateralism limits American power and its vocation to effectively rule the world.
The socalled Bush Doctrine holds that the United States has the right to wage
preventive wars, should it be threatened by terrorists or rogue nations. Near
consensus is found that America should be hawkish, use its power vigorously to
intervene in internal affairs overseas, circumvent international law, and, if necessary,
use preemptive strikes at hostile nations belonging to the socalled axis of evil for
undeterrable threats. The idea that normal constraints of international politics no
longer immediately inhibit the exercise of American might replaced the doctrine of
deterrence as the primary means of selfdefense.
With the arrival of the George W. Bush administration, the neocons got absorbed into
mainstream American conservatism. President George W. Bush himself is a born
again Christian, affiliated to the Methodists. The speeches of Bush are filled with
Biblical quotations especially from the Apocalypse and neocon rhetoric. In 2003,
for example, Bush started his State of the Union speech as follows: In all these days
of promise and days of reckoning, we can be confident. In a whirlwind of change and
hope and peril, our faith is sure, our resolve is firm, and our union is strong. The end
of the speech included the following: We Americans have faith in ourselves, but not
in ourselves alone. We do not know we do not claim to know all the ways of
Providence, yet we can trust in them, placing our confidence in the loving God behind
all of life, and all of history. May He guide us now. And may God continue to bless
the United States of America. Bushs religious fervor also explains his foreign
personal allegiances with equally religiously inspired leaders such as Brazils Luiz
Igncio Lula da Silva, Russias Vladimir Putin, and Britains Tony Blair and his
356
Boot, Max (2001), The Case for American Empire, Weekly Standard, October 15.
357
Fukuyama, Francis (1992), The End of History and the Last Man, New York: Free Press;
Huntington, Samuel (1996), The Clash of Civilizations and the Remaking of World Order, New
York: Simon and Schuster. Fukuyama proclaimed the unabashed victory of economic and political
liberalism on the stage of the world history and declared the total exhaustion of socialism as a viable
alternative to liberalism.
149
discontent with adamantly secular leaders such as Frances Jacques Chirac and
Germanys Gerhard Schrder. He described his allegiance with the leader of Turkey,
Recep Tayyip Erdogan, a devout Muslim, by declaring: You believe in the
Almighty, and I believe in the Almighty. Thats why well be great partners. Bushs
position on environmental affairs is driven by an apocalyptic worldview. The belief of
the imminence of Christs second coming justifies a less proactive environmental
stance: why save the planet if Jesus is coming back anyhow?358
The neocon influence reached its pinnacle during the early days of the George W.
Bush Administration. Neocons justified the U.S.led invasion of Iraq. Ever since, the
influence of neoconservatism on contemporary America seems to be correlated to the
situation in Iraq. Neocons have also tried to resurrect the just war theory. According
to Novak, September 11 has forced us to rethink the notions of justwar theory and
the legitimacy of various phases of subsequent acts of war. He argues that the terrorist
attack on the United States has questioned the legitimacy of turning to the United
Nations. Novak defends that major revisions to just war theory and formulating new
arguments about legitimacy in war and in peace have to be made. He started his quest
to justify unilateral American action by visiting Pope John Paul II in February 2003.
In a controversial meeting, which was condemned by other members of the Roman
Catholic Church, Novak challenged the justwar doctrine at the Vatican.359 Novak
was invited to the Vatican by James Nicholson, the United States ambassador to the
Holy See to present his theological justification for preventive warfare against Iraq.360
In sum, Novak holds that the just war tradition does not begin with a presumption
against war or violence, but with the presumption that the protection of international
order in every generation is likely to require either going to war for the sake of
restoring justice, or (better) at least the intimidating and wellhoned capacity to fight
just wars successfully, in order to prevent them in advance.361
Novaks hawkish worldview is furthermore confirmed with his assessment of the US

invasion of Iraq in 2003. He concludes: Militarily, the Iraq War of 2003 was one of
the most brilliantly conceived and executed campaigns in military history. It was
politically original in its conception and its effect: It removed a regime just as neatly
from its surrounding tissue as a good Italian chef slices a fish and lifts out the spine
and the bones. With a minimum of urban damage and civilian casualties far less
than either critics or proponents of the war predicted in advance the Baathist regime
was lifted out from the body politic. Novaks assessment was premature. His
theoretical justification for the Bush administrations foreign policy in highly
triumphalist terms backfired. He failed to address the setbacks the US army has
suffered. He also carefully avoided mentioning crucial issues such as the privatization
of warfare and corporate scandals surrounding the war, including Halliburtons
dubious role. Novaks refusal to address the new or aggravated features of
358
Ruthven, Malise (2004), Fundamentalism: The Search for Meaning, New York: Oxford
University Press.
359
Allen, John (2003), American Catholic Leaders Protest Novak Visit to the Vatican, National
Catholic Reporter, February 14.
360
Novak, Michael (2003), Asymmetrical Warfare and Just War, Speech Delivered at US
Department of States Speaker and Specialist Program, Rome, February 8;
361
Novak, Michael (2004), Just Peace and the Asymmetric Threat: National SelfDefense in
Uncharted Waters, Harvard Journal of Law & Public Policy, 27, pp. 817841.
150
contemporary armed violence, which present huge challenges for ethicists, is a missed
opportunity.
The quagmire in Iraq has let to a loss of neocon influence in the international scene.
By placing all energy in legitimizing warfare, neocons have ignored the fact that the
United States has spent much more on the military, the wars in Iraq and Afghanistan
and military aid to particular allies in recent years than on development aid. Neocons
are notoriously ignoring an ever growing consensus among politicians, diplomats and
theologians that monetary and moral investments in civil society or soft power is
critical to the struggle against Islamist extremism. By ignoring these latest insights,
the neocon proposition has seriously lost credibility. The failure of the US occupation
of Iraq and the growing moral and diplomatic isolation of the George W. Bush
Administration has slowly forced the neoconservative camp into retreat.
Despite all these setbacks, there are no signals that neoconservatism is dying. In a
time in which moral policy questions on Islam radicalism, illegal immigration and
secularism are on the rise, the neocons are poised to continue to play a leading role in
the escalating culture wars in and beyond the United States. Michael Novak, Richard
John Neuhaus and George Weigel will continue to exert great influence not only on
social conservatives but also on the public opinion. All three scholars will continue to
provide powerful insights into the interplay of religion, economics, culture, and
democracy in our era of globalization. All three convincingly argue that cultural,
political and economic liberty is a sine qua non for a society to prosper.
151
5. Preliminary Conclusion: Evaluating MoralTheological

Contributions
In the second part, this occasional paper has focused on three moraltheological
perspectives, which each have significantly contributed to the business ethics debate.
It has become clear that the three highlighted theological viewpoints sharply differ in
their ideological assumptions, methodological application and overall conclusions.
This section will review the strengths and weaknesses of official CST and the two
examined contextual theologies.
5.1. Advantages and Limitations of Official Catholic Social Teaching
More than the radical outlets of liberation and neocon theologies, which at best can
regarded as outlier positions, official Catholic social teaching has more consistently
managed to formulate relevant general guidelines for business ethics. Ever since
Rerum Novarum, the magisterium has managed to formulate relevant theological
orientations. Each highlighted encyclical therefore contains significant contributions
for the business ethics debate. Its assessments of both the shortcomings and strengths
of economic systems have proven to be more nuanced than the examined contextual
theologies. Official CST has often been ahead of its time and sometimes even
prophetic. It has managed to give business the right value in society. It knows how to
value the importance of entrepreneurship and regulation, freedom and solidarity,
without absolutizing or glorifying the freemarket system. Official CST clearly has
developed in accordance with the changing circumstances of history, always drawing
its origins from the message of the Gospel, which it holds as the principal source of
renewal for history.362
One of the biggest strengths of official CST, which simultaneously reveals the
weakness of both liberation and neocon theologies, is that it is careful about
establishing the methodological link between the socioanalytic and hermeneutic
mediation. In the encyclical Centesimus Annus, Pope John Paul II acknowledges the
crucial role of social sciences: The human sciences and philosophy are helpful for
interpreting mans central place in society and for enabling him to understand himself
better as a social being.363 CST pauses first to study economics qua economics and
does therefore not jump to conclusions, as is too often the case with liberation and
neocon theologians. It carefully argues that Catholic social teaching cannot be a
substitution for economics.
The encyclicals are moreover correctly disinclined to espouse detailed economic

solutions to social problems; it merely tries to make moral sense of the social order
for a global audience. The Vatican is respectful of the expertise of economists but also
affirms that a business community can only fully blossom, if human beings
participate, equally and fully, in other communities, such as family, church and civic
and cultural associations. CST reiterates that economics becomes useless or even
362
Pope Paul VI (1971), Octogesima Adveniens, Vatican, May 14, 42.
363
Pope John Paul II (1981), Centesimus Annus, Vatican, May 1, 4.2.
152
harmful if it pursues objectives that are opposed to human dignity. It does not justify
its position with concepts from economics alone such as elasticity, profit margins
and cost efficiency but rather bases its position on the moraltheological concept of
human dignity. In this regard, Pope John Paul IIs contribution has been essential.
Nobody has provided a more systematic and thorough analysis of the moral theology
in modern times. His brilliantly constructed and fearlessly argued moral teachings and
astonishing influence among Catholics and nonCatholics will remain alive.
CST has evolved dynamically in response to the changing signs of the times. In the
twentieth century, it has prophetically positioned itself in between the extremes of
individual liberalism or liberal capitalism and collectivism or socialism. The prior was
condemned, as it failed to recognize the social dimension of the human person. The
latter was rejected, as it failed to recognize the dignity or sanctity of the human
person. The two instructions of the Congregation for the Doctrine of the Faith, for
example, have brilliantly diagnosed the ways in which liberation theologians diverted
from authentic Catholic theology. Both instructions prophetically anticipated
historical events.
At the outset of the twentyfirst century, the church authority is now challenged to
constructively criticize the excesses and failures of the two most outspoken features of
Western society: political liberalism and freemarket economics. More theological
and pastoral guidelines on these issues should be a priority for the Vatican and local
churches alike. As the contemporary dynamics on economics have evolved
dramatically with the advent of globalization, an updated encyclical on its religious
and ethical dimensions is warranted. The fortieth anniversary of Pope Paul VIs 1967
social encyclical Populorum Progressio provides an opportunity.
In sum, the pertinent encyclicals to the business ethics debate of Pope John Paul II
and Pope Benedict XVI are much more consistent, coherent and relevant than most
writings of liberation and neocon theologians. The encyclicals convincingly point at
the intrinsic value of theological concepts in the business ethics debate, such as
stewardship, cocreation and human dignity. Catholic social teaching gives the most
compelling answer to the manifold errors of an economistic worldview by
convincingly placing business in the wider terms of its overall role in achieving the
common good.
5.2. Strengths and Weaknesses of Liberation Theology
Liberation theologians have not only considerably renovated theological vocabulary,

but have also prominently participated in the political debate. New concepts have
been invented and widely used in church, politics and social movements alike. This
does not mean that certain theological positions are not controversial. Several areas of
contention can be distinguished.
In the first place, liberationist commitment to Marxist analysis as the best

epistemological tool for understanding poverty is not plausible. The Congregation for
the Doctrine of the Faith was far ahead of the curve by denouncing Marxist influences
in its instructions Libertatis Nuntius and Libertatis Conscientia. The Marxist view
153
that a society under capitalism consists of two classes one small and rich, the other
vast and increasingly impoverished is too simplistic and has never been tenable.
Although often defended by liberation theologians, it is too difficult in practice to
make a clear distinction between historical materialism and dialectic materialism.
In the second place, the liberationist preferential option for the poor has too often
been used in an exclusive way. The idea of the church having a preference for any
social class is rather antithetical to the universality of the Christian message. The
more radical wing of liberation theology argues that the socalled preferential option
for the poor must be primarily political or economic. A personal approach is
downplayed as mere volunteerism and should therefore be regarded as something
reactionary. In order to be genuine, the preferential option for the poor should be
critical and scientific, which in liberationist thought too often refers to Marxist
revolutionary evaluations. Even in the less radical expressions of liberation theology,
any other praxis is too easily being discarded as ahistorical and not scientific,
or minimized as mere charitable work. Raising the consciousness of the
impoverished to their social and economic rights and a call for action is regarded
as an ultimate noble struggle for justice.
The preferential option for the poor, nevertheless, has been coopted by the
Vatican. Recently in Aparecida, Pope Benedict XVI correctly emphasized that the
preferential option for the poor is implicit in the Christological faith in the God who
became poor for us, so as to enrich us with his poverty.364 The CELAM reached a
reasonable middleground in Aparecida, which can be embraced by all camps, by
explicitly affirming an option for the poor, but changed it to become a preferential
and evangelical option, which reiterates the fact that it eventually is not about
political commitment.
In the third place, the widely adoption and emphasis on the concept of sinful
structures should also be regarded as theologically controversial. In liberationist
thought, the theological concept of sin is differentiated into three dimensions:
personal, social and structural. Although liberation theologians argue that the three
dimensions are interconnected and dialectical, most attention is being paid to the latter
dimension. Individuals might be corrupted by personal sin or might be the source of
sin, but liberationists see unjust social structures as the main carriers of sin. In other
words, sin is interpreted as objectified evil, which is predominantly external and
oppressive to the individual. The most widely used scapegoats of socalled structural
sinful structures are notions such as capitalists, multinational firms, private
property, national security and the financial system. These rather abstract
notions are accused of having permeated the social structure organization and should
therefore be demonized acrosstheboard. By treating sin as an abstract, structural,
systemic or broad social reality, the concept of personal accountability is obscured.
Official CST has also been reluctant in embracing the liberationist view. Pope John
Paul II reiterated in his postsynodal apostolic exhortation Reconciliation and
Penance, which was promulgated in 1984: Sin, in the proper sense, is always a
personal act, since it is an act of freedom on the part of an individual person and not
364
154
properly of a group or community.365 It should also be stressed, however, that the

Compendium of the Social Doctrine of the Church acknowledged the social
dimension of sin. It describes social sin as obstacles and conditioning that go well
beyond the actions and brief life span of the individual, and interfere also in the
process of the development of peoples, the delay and slow pace of which must be
judged in this light.366 The Vatican here clearly argues that sin can be both personal
and social. The same line of reasoning can be found in Pope Benedict XVIs opening
address in Aparecida. In Brazil, the pope argued that just structures are a condition
without which a just order in society is not possible.367 Sin should be regarded as
having several, equally important dimensions. None of these dimensions however
should be overemphasized.
In the fourth place, the most radical wing of liberal theologians, which includes Franz
Hinkelammert, Pablo Richard, Hugo Assmann and Jung Mo Sung, have
systematically outlined a critique of neoliberal market economys utopianization of
the market. All radical theologians point at the socalled internal contradictions of
capitalism, which are subsequently explained in theological terms. In short, it is
argued that capitalism necessarily demands sacrifices, as if God imposes a law that
ends in death. Modernity for these theologians is therefore idolatrous rather than
secularized. The unmasking of such theology of capitalism or imperialism is regarded
as the central task of theology. The dangers of capitalism have been wellexamined
and documented by the Vatican, including at the opening speech of Pope Benedict
XVI in at the CELAM assembly in Aparecida. Even most opponents of liberation
theology would agree with the central theological tenants of Hinkelammerts
theology, which are human dignity and the affirmation of life.
My disagreement with the radical wing of liberation theology begins with the problem
of how we should address the problem of idolatry: which pastoral guidelines should
be applied; which institutions are bestplaced to enhance life; what should we do
instead? Whereas liberation theologians excel in lamenting the poverty of much of the
world, they hardly attempt to present viable alternatives. Hinkelammerts call for
funding resistance can hardly be regarded as something Christian. The radical wings
lack of viable alternative options makes their critique callow and shallow. Radical
liberation theology may score rhetorical points but remains stuck in utopian vision
with a deeply flawed view on the dynamics of probusiness, freemarket societies. In
that sense, it seems that liberation theologians have simply disregarded or overlooked
the prophetic insights of the two useful Instructions Libertatis Nuntius and
Libertatis Conscientia of the Congregation for the Doctrine of the Faith, which
with the benefit of hindsight have proven to be way ahead of the curve.
The few alternative scenarios presented by the less radical wing of liberation
theologians are mostly neutral, hollow descriptions. One of the magic formulas often
presented as a response to global problems are massive financial transfers from the
developed to the lessdeveloped countries. Besides defending the practical value of
aid flows, transfers are justified from a moral viewpoint as a payoff for guilt or the
365
Pope John Paul II (1984), Reconciliation and Penance, Vatican, December 2.
366
25, 119.
367
155
legacy of colonialism. There is nonetheless no empirical evidence that would justify

massive wealth redistribution. Pioneers in development economics, such as Peter
Bauer, Paul RosensteinRodan and Gunnar Myrdal, already pointed at the socalled
absorptive capacity problem in the 1960s.368 Both economists calculated how much
investment is required to help launch a sustainable development path based on the
assessment of a countrys ability to absorb. Overseas aid should be given to jump
start development, which in return should be matched by domestic savings.
Substantial empirical evidence conducted over several decades has concluded that
recipient countries are more likely to reduce, rather than increase, their own savings
and investment rate. Recognition of the oil curse and aid curse is absent in liberation
theology writings.369
Liberation theologians see economic development and corporate success too much as
a zerosum game, as if the development of one depends on the underdevelopment of
others. Liberation theologians still too much rely on magic formulas such as wealth
redistribution, land reform and renationalization of privatized corporations. They
remain stuck in a dichotomy between revolution and reformism: the overthrow of
corporate power is deemed necessary, while mainstream business ethics programs are
considered as ineffectual or as an ideological smokescreen that supports the status
quo. Liberation theology is trapped by its reliance on ideology critique and conspiracy
theory that it cannot produce a more practical solution. The theological crux for
liberation theologians too much resides in apocalyptic denunciation or shotgun
diplomacy, without a clear diagnosis and identification of the underlying problems.
Romantic socialists such as Castro in Cuba and Aristide in Haiti were or are still
hailed as charismatic figures, beloved more for their antiAmerican bravura than for
their domestic policies. Liberation theologians should not stick to utopian socialist
visions with flawed visions of society. The spirit of utopian socialism based on
cooperation and human solidarity might be closer to the redemptive message of
Christianity, but that does not justify a glorification of unfeasible projects.
In sum, liberationists excel in highlighting the ideological cry of the oppressed but
avoid addressing the technical questions and insights of modern economic theory or
development economics. Liberation theologians correctly place the quest for life and
justice at the forefront but lack expertise in how to address them from a practical
viewpoint. Instead of relying on the latest insights of development economics such
as microfinance schemes and contextdriven strategic CSR it prefers to stick to an
outdated ideology critique, which touches on abstract philosophical or legal
frameworks, rather than the infrastructure or economic base. They consistently over
simplify complex business procedures and underestimate complicated dynamics of
corporate conduct. The bottom line of liberation theology is that Christianity is the
religion of which socialism is the practice. In their ideological quest, modern insights
368
Development economics is a branch of economics that deals with the study of causes and effects of
growth, especially in developing countries. Unlike classical economics, development economics
incorporates sociopolitical and cultural strategies to enhance prosperity in developing countries. The
discipline of development economics appeared in the 1960s and consolidated in the 1970s the
decades of decolonization amid optimism that the newlyindependent countries in Asia, Africa and
Latin America could eventually catch up with North American and Western European economic
standards or levels of prosperity.
369
Bhagwati, Jagdish (2006), A Noble Effort to End Poverty, Bono, but It Is Misdirected, Financial
Times, February 28.
156
of economic theory are not taken seriously. Modern economics remain a blind spot for
liberation theologians. Without conducting a profound social analysis, the faith
perspective of liberation theology frequently loses touch with reality and therefore
results in social alienation. Personal experience in Brazils favelas has taught me that
access to credit (microlending schemes), a spirit of enterprise, ownership, pioneering
and invention are more crucial for poor people to be lifted out of poverty.
In addition to these four theological areas of contention, there are other surprising
weaknesses. It has to be concluded that economics has only played a minor role in the
writings of liberation theologians. Little attention to the economic challenge has been
paid at best, or completely ignored at worst. This seems rather odd as Cldovis Boff
emphasized the crucial importance of a correct use of the socioanalytic mediation as
early as 1976. His brother Leonardo Boff has moreover argued that liberation
theology is an epistemological rupture, the first theology based on the perspective of
the poor, which presumably would imply a profound analysis of the causes of
economic poverty. These recommendations, unfortunately, have not been
incorporated in the writings of liberation theologians. Judged from the space allotted,
economics has no longer been a central theme of liberation theology since the late
1980s. According to Jung Mo Sung, the almost total absence of the economic
challenge in the theological thinking of an important group of liberation theologians
exposes an anomaly.370 Mainstream theologians, including Gustavo Gutirrez,
Leonardo Boff, and Jon Sobrino, have seldom employed a thorough socioeconomic
investigation.
The more radical liberation theologians, such as Franz Hinkelammert, Hugo Assmann
and Frei Betto, might have addressed economic issues, but their writings are not
rooted in empirical analysis. The lack of rigor makes their arguments less compelling
and their overall work less credible. The radical wing of liberation theology argues
that Cldovis Boffs method implicitly sets up a divide between theology and the
social sciences, disabling liberation theology from moving from an abstract discourse
about liberation to the very pursuit of liberation as a social challenge. In this mindset,
by delimitating the socioanalytical stage as strictly nontheological, liberation
theology would not be allowed to focus on liberation. Jung Mo Sung goes even
further by claiming that the hermeneutic mediation is unnecessary as it would not add
anything to what is already revealed by the socioanalytical mediation.371 Gustavo
Gutirrez does not agree with this radical interpretation, arguing that the social
sciences are simply a means to better understand reality.372 This view is consistent
with the remarks of Cldovis Boff, who argues that it is only within the hermeneutic
stage that the discourse is formally theological. Jesuit father Joo Batista Libnio373
also agrees by stressing that the social sciences are pretheological because they
simply prepare reality for theological reflection.
370
Mo Sung, Jung (1993), Economia: Um Assunto Central e Quase Aausente na Teologia da
Libertao. Uma Abordagem Epistemolgica, So Bernardo do Campo: Instituto Metodista de Ensino
Superior, p. 2.
371
Idem, pp. 111118.
372
Gutirrez, Gustavo (1986), La Verdad los Hara Libres, Lima: CEP, p. 87.
373
Libnio, Joo Batista (1989), Teologia da Libertao: Roteiro Didtico para um Estudo, So
Paulo: Loyola.
157
Liberation theologians are mostly void of indepth knowledge of economics.

Examples abound. The most distorted economic viewpoints are presented by
Hinkelammert. Cogent and factfilled arguments are mostly lost in his discourse. He
argues, for example, that the imperial theology tries to coopt liberation theology. The
empire is represented by the American Enterprise Institute, the Pentagon, the CIA, the
FBI and the IMF. In his worldview, they all conspire against the poor. Capitalism is
interpreted as an ideology of exploitation. Multinational corporations are intrinsically
exploitative, expansionist, destroy local cultures, perpetuate humiliating dependency,
and are therefore the main vehicles of neocolonialism. Hinkelammert has a tendency
to rely on apocalyptic jargon like the triumph of neoliberalism and the unrivaled
hegemony of the United States. Borrowing heavily from the dependency theory, he
argues that capitalist nations have become prosperous at the expense of impoverished
nations.374
Statistical evidence rather points at the opposite. For example, liberation theologians
prefer to ignore Amartya Sens thesis that severe famines arise mainly where
commercial freedoms and civil society are severely restricted.375 It is simplistic to
reduce the question of poverty to a conflict between the affluent and the poor. The
growing internationalization of corporations makes nonsense of the paranoia, in both
developed and lessdeveloped countries, about foreigners buying national
corporations. Since the turn of the millennium, more Brazilian, Indian, Russian and
Chinese firms have been buying Western European and North American corporations
than the other way around. From the economic viewpoint, the standoff between the
rich and the poor, between them and us, is false and misleading. In an
increasingly globalized economy, the notion of our corporations will become even
more elusive.
Leonardo and Cldovis Boff have also too often simplistically argued that the
development of the North is based on the exploitation of the South. A clear
example is the way in which they criticize the pastoral letter of the US Catholic
Bishops on the US economy, entitled Economic Justice for All, which was
promulgated in 1986. According to the Boffs, the letter is based on five false
presuppositions, which prevent the bishops from addressing the real problems. In
rather moralistic turns, the brothers argue that the North depends on the South and
that therefore capitalism is inherently evil. Instead of praising concrete pastoral
guidelines, the brothers dismiss the North American bishops analysis as superficial
and not directed towards the rootcauses.376 The brothers dangerously mix religious
sentiments with dubious political ideologies and economic ideas. Leonardo Boff
continues to glorify the Cuban economic model. In a conversation with Fidel Castro,
Boff has argued the following: If Cardinal Ratzinger understood half of what you
understand of the theology of liberation, my personal destiny and the future of this
theology would be very different.377
374
Hinkelammert, Franz (1997), Liberation Theology in the Economic and Social Context of Latin
America: Economy and Theology, or the Irrationality of the Rationalized; in: Batstone, David,
Eduardo Mendieta, Lois Ann Lorentzen & Dwight N. Hopkins, Liberation Theologies, Post
modernity, and the Americas, New York: Routledge, p. 42.
375
Sen points at the Ukraine in the 1930s, China in the 1950s and North Korea in the 1990s.
376
Boff, Cldovis & Leonardo Boff (1987), Good News of Bishops Economics Pastoral and Bad
News Left Unmentioned, National Catholic Reporter, August 28.
377
Allen, John (2006), Boff and Betto on Castro, National Catholic Review, August 18.
158
Another liberation theologian with rather limited knowledge of economics is Jon

Sobrino. For example, he argues that the First World needs the Third Worlds
geography in order to dispose of its toxic waste and its raw material. His flawed
assertions lull the reader into a false belief of a capitalist conspiracy. Miserable
economic conditions in the South are naively explained in terms of the outdated
dependency theory. Liberation theologians have a predisposition to use this obsolete
model, which is used to explain the dialectic relationship between the socalled
opulence of the sumptuous North and the wretched poverty of the excluded
South. The use of such bombastic slogans cannot be backed up with empirical
evidence and should therefore be condemned as a futile exercise in rhetoric.
The limited knowledge of economics is made worse by the use of controversial

terminology. Instead of stressing or unlocking the potential of lessmaterially well
off people, as for example is the case in microfinance projects, liberation theologians
resort to terms with double meanings. Gutirrez argues that from the perspective of
liberation theology, we spoke of subjugated people, exploited classes, despised races,
and marginalized cultures.378 The image of the corporation presented in mainstream
liberation theology writings tends to be that of a free rider or usurper, unjustly and
uncooperatively enriching itself to the detriment of culture and community. Boff and
Hinkelammert most frequently use the term oppression to define the living condition
of people in lessdeveloped regions. Oppression presupposes exploitation and the
culprits are mostly rich landowners or multinational corporations. Consequently,
those who have more goods are regarded as oppressors or aggressive imperialists. In
other words, it is the rich nations who have caused them to be poor and have
structured society in such way that Latin America cannot extricate itself. Liberation
theology interprets the socioeconomic situation through a Marxist doctrine:
capitalism as the culmination of imperialism which dominated underdeveloped
nations sometimes through direct intervention but mostly through exportation of
capital. Albeit lately, even Gutirrez has acknowledged that in the early days of
liberation theology, there has been a tendency to uncritically accepting the claims of
Marxist and dependency theories.
Redistribution of wealth is still too often naively presented as the panacea for all of
the ills of the poor. This kind of logic is shortsighted and lacks commonsense.
Business is mostly about making and not collecting money and goods. According to
Oxford Professor Collier, nearly twofifths of Africas private wealth is held abroad,
much of it in Swiss bank accounts. Collier convincingly demonstrates that most rebels
in subSaharan Africa are not heroic freedom fighters but selfinterested brigands.379
Liberation theologians also still widely use the obsolete concept of Third World. The
concept is linked to the dependency theory, which itself is an outdated worldview
based on faulty assumptions. The concept has only served to perpetuate the myth of
dependency, which erroneously holds that economic underdevelopment can only be
378
Gutirrez, Gustavo (1999), The Task and Content of Liberation Theology; in: Rowland,
Christopher (editor), The Cambridge Companion to Liberation Theology, Cambridge: Cambridge
379
Collier, Paul (2007), The Bottom Billion Why the Poorest Countries Are Failing and What Can Be
Done About It, Oxford: Oxford University Press.
159
explained in terms of victimization. Liberation theologians should rather inspire

themselves on terminology widely used in the field of contemporary economics. In
the jargon of the financial markets and investment banking, developing countries are
now referred to as emerging markets, which positively points at their growth
potential. The transformation from Third World into Emerging Market is both a cause
and reflection of a deeper shift in the national psyche of countries like Brazil, India
and South Africa, casting away the lingering ethos and inferiority complex of its
colonial past.380
Liberation theologians are also unreasonably suspicious or even hostile of the profit
motive: limitless monetary accumulation is obviously not a virtue in itself but
profitability should indeed be regarded as a thermometer of talent and responsible
stewardship. The antibusiness bias of liberation theologians is therefore highly
counterproductive. Profits are crucial to preserve jobs, pay fair salaries and social
benefits, contribute toward pension and insurance systems, and expand into new
areas. Profits are moreover of crucial importance for the tax collector, who needs
corporate profit to subsidize or finance public projects. The often implicit liberationist
charge that managers of multinational corporations are heartless reactionaries misses
the point.
Liberation theologians dangerously downplay the fact that a local or global

corporation has to be profitable in order to survive in a competitive business
environment, where financially unsustainable and inefficient practices are ruthlessly
attacked. Accumulated profits translate into material affluence, but can also translate
into intangible wealth, such as higher public regard and selfesteem. In the era of
globalization, capital flows are crossborder, flowing beyond local or national
authorities. Multinationals operate globally and book profits and losses in countries
where advantageous tax treaties can be negotiated. Local and national rules do no
longer suffice in the era of open borders and open markets. Law is not necessarily a
reliable standard for determining moral behavior. What is legal is not always moral,
and what law prohibits is not always immoral.381 According to Maitland, in a liberal
democracy, there are limits to the extent to which socially responsible behavior can be
ordered by law: beyond a certain point, the costs of expanding the apparatus of state
control become prohibitive in terms of abridged liberties, bureaucratic hypertrophy,
and sheer inefficiency.382
In sum, it is not dependency that makes Latin American economies underdeveloped;

it is the psychology of dependency that is mostly behind its poorer economic status
quo. Economic underdevelopment cannot be explained in terms of victimization only.
A nagging frustration of liberationist writings is to run together criticisms of
economic performance and economic science as if everything wrong with the world
can be blamed on the North or the West.
380
China and India, for example, are now turning out more engineers and scientists than the United
States, the European Union and Japan.
381
Stopping on a highway to offer aid at a traffic accident is morally desirable. Neglecting an accident
would be perfectly legal but morally suspicious. In the United States, the socalled Good Samaritan
laws provide immunity from damages to those rendering emergency aid.
382
Maitland, Ian (1985), The Limits of Business SelfRegulation, California Management Review, 3,
p. 132
160
5.3. Pros and Cons of Neocon Theology
The second scrutinized contextual theology focused on the most influential North
American theology at the turn of the millennium. Neocon theologians have shaped the
theological debates not only in seminars but also in the US parliament and foreign
policy thinktanks. Novak, Neuhaus and Weigel convincingly highlight the crucial
importance of culture in the domain of politics and economics. The three examined
neocon theologians rightly point at the manifest strengths of freemarket economics,
which undoubtedly include profit maximization, the creation of material abundance,
and support for human liberties. There is no doubt that the freemarket model is the
main highway to profit maximization and a main agent of economic prosperity.
Americas strong belief in human and economic progress is valuable, as it eventually
is a statement that the chains of poverty can be broken. In that sense, the American
Dream as a process of moving up the social ladder, generation by generation, is an
extraordinary example of the power of moral convictions. The impressive track record
in achieving wealth accumulation makes the American undoubtedly preferable to the
socialist mode of production. Novak, Neuhaus and Weigel compellingly argue that
official CST could and should help advance civil society, market economies, the rule
of law, and the prospects of entrepreneurship, especially in economically
underdeveloped nations.
Weigels extensive writings continuously underscore the crucial importance of the

formation of Catholic consciences through official CST. He correctly understands that
the critical mass of civil society is formed by moral convictions and not simply by
certain abstract electoral, legislative, executive and judicial procedures.383 Fed
Chairman Alan Greenspan has famously argued that irrational exuberance and
infectious greed are main drivers of financial markets.384 In a reference to corporate
malfeasance, even US President George W. Bush has even argued that there is no
capitalism without conscience; there is no wealth without character.385 There is
indeed no doubt that the best strategy should focus on cultureformation, which then
can lead to more ethics in business and politics. It is worth recalling that this has
exactly been the strategy of Pope John Paul II, not only in challenging rightwing
dictators such as Marcos in the Philippines, Pinochet in Chile and Stroessner in
Paraguay but also communist regimes behind the Iron Curtain. Weigel compellingly
has picked up on Pope John Paul IIs methodology.
Nowadays, Weigel aligns himself to Pope Benedict XVI, in his quest to seize
ideological control of the culture wars against materialism, relativism and secularism.
Both have recently made constructive contributions to the debate and convincingly
demonstrated that we are living in moment of dangerous imbalance in the relationship
between the Wests technological capabilities and the Wests moral understanding at
383
Weigel convincingly elaborated on these issues in a lecture held at the Centre for Independent
Studies at the Australian Stock Exchange Theatrette in Sydney, on October 23, 2000. The lecture was
entitled The Moral Foundations of Freedom.
384
Greenspan, Alan (1996), The Challenge of Central Banking in a Democratic Society, Washington,
D.C.: Remarks At the Annual Dinner and Francis Boyer Lecture of The American Enterprise Institute
for Public Policy Research, December 5.
385
Bush, George W. (2002), Remarks on Corporate Responsibility, New York: Regent Wall Street
Hotel, July 9. In this speech, Bush also stressed that our schools of business must be principled
teachers of right and wrong, and not surrender to moral confusion and relativism.
161
the turn of the millennium. Their contention that the moral and political lethargy in
much of Europe today is a byproduct of Europes disdain for the Christian roots of
its unique civilization, a contempt which has contributed in various ways to the decay
of what was once the center of world culture and worldhistorical initiative, is
currently hotly being debated in academia, boardrooms and parliaments. Despite these
considerable strengths, it has also become clear that the neocon proposition suffers
from serious flaws.
In the first place, several key theological positions of neoconservatives are less than
obvious. Novaks contention that a business corporation is a much despised
incarnation of Gods presence in the world lacks conviction. His argument that a
corporation mirrors Gods presence also in its liberty is ludicrous.386 Novak lulls his
audience into believing that a corporations ultimate significance is theological rather
than socioeconomic. A corporation is indeed a powerful instrument to enhance
prosperity but that should not be blindly interpreted as a sign of Gods presence in the
world. A corporation is a great tool to create wealth but that does not make it
immediately and unquestionably a locus of Gods grace. By the same token,
fomenting a culture of enterprise is praiseworthy but should not be interpreted as a
quest to get rid of legal constraints at any cost. Pope John Paul IIs criticism of the
modern welfare state, for example, should not be interpreted as a criticism on the ideal
of social assistance but rather as a criticism on relying on onerous redtape. The
contrast between Novaks argument and official CST here is often stark. Novak
downplays the concept of social justice in CST as a dangerous deviation towards
socialism, emanating from theologians who have no real grasp of economics. Such
vision distorts the real intention behind CST. By using bombastic slogans, Novaks
theology of the corporation unfortunately sometimes becomes more an idolatry of the
corporation.
A second serious flaw of neoconservative theology is its ambition to justify or

legitimize the status quo. Novak correctly argues that a corporation is a moral
institution but that should not automatically lead to his contention that it is also
intrinsically good, especially when compared to the State, for which he only reserves
deep suspicion and contempt. Novaks disdain lacks nuance. While liberation
theologians can be accused for being too compassionate about poverty without
examining the root causes, the opposite holds true for neocons: Novak, Neuhaus and
Weigel show hardly any compassion regarding the miserable social, economic and
political situation in the developing world or the status of the lessaffluent in their
own America. It is too simplistic to argue that socioeconomic misery is completely
due to a lack of freemarket capitalism. Charity is moreover too often presented as a
structural answer. Both examined contextual theologies present serious flaws:
whereas liberation theologians unconvincingly demonize the freemarket economy,
the neocon theologians unreasonably glorify its dealings.
The three neocon theologians defend the moral superiority of capitalism by arguing
that Americas free enterprise system, although not perfect, is inherently moral
because its value system is based on freedom and efficiency. In their worldview, the
role of the Catholic Church exists in setting transcendent moral standards or truths by
386
Novak, Michael (1990), Toward a Theology of the Corporation, Washington, D.C.: The
American Enterprise Institute Press, p. 39 and p. 44.
162
which to adjudicate differences and settle arguments in societies. However, the fact
that America is driven by what Alexis de Tocqueville described as burning desires,
enterprising, adventurous, and, above all, an innovator does not make it more equal
than other nations. Americas quest for being rewarded economically, its delight for
novelty and discovery and frequently experienced disproportion between effort and
reward should not be confused with moral superiority. According to the Catholic
Workers, Novak, Weigel and Neuhaus are guilty of using Catholicism as window
dressing to promote an economic system based solely on selfinterest, a system that
has nothing to do with the Gospel or Catholic social teaching.387
Even from a strictly economic viewpoint, it is hard to argue that the United States is
the Promised Land. Too often, neocon theology reads like an attempt to justify the
American way of life. Random employment of Puritan concept, such as Gods new
chosen people or, in Abraham Lincolns remarkable words, Gods almost chosen
people, can be troublesome if applied to different cultural settings. Catholic social
thought cannot be interpreted as an unqualified affirmation of the American
experiment. There is no need to emphasize that nonAmerican societies, based on a
different set of values and norms, have also been successful in their quest for socio
economic and political development. Neocon attempts to square Catholic teaching
with the American economic model is controversial. The notion that America has a
special vocation and a divinely ordained mission might seem plausible for Americans
but is not a winning proposition beyond its own borders. It much less does win hearts
and souls in the trenches of the Middle East. Neocons spend too much time on trying
to Americanize Catholicism and demonize European democratic socialism. It is worth
highlighting the words of Pope Benedict XVI, who argues that democratic socialism
was and is close to Catholic social doctrine, and has in any case made a remarkable
contribution to the formation of a social consciousness.388 Novak, Neuhaus and
Weigel seemed not to have taken notice of these words, which were written when
Ratzinger still served as cardinal. The glorification of the American economic model
is never convincing as it is based on selective reading and arbitrary interpretations.
In summary, the neocon worldview is based on four faulty assumptions at the political
level: the primacy of indefinite and unlimited force over diplomacy; the unbridled
exercise of US military power; the preservation of unipolar world in which the United
States is the sole hegemon; and the right to engage in preventive warfare in the
absence of immediate, concrete threats. The neocon quest to theologically legitimize
coercive regime change and American hegemony should be condemned as
illegitimate and immoral. Envisioning a world in which the United States is a
benevolent hegemon helping transform failed states into democratic, liberal nations in
the American image is not a winning proposition. The USled invasion of Iraq under
the George W. Bush Administration was too much based on a belief of social
engineering: a US occupation would overcome Iraqs sectarian differences, boost
democracy and eventually become a miniAmerica. These hopes have long been
buried under the ruins of Bagdad, with serious consequences for the credibility of the
neocon proposition. Neocon rhetoric often alienates other cultures, who are
387
Zwick, Mark & Louise Zwick (1999), The Economic Religion of Michael Novak: Wealth Creation
vs. the Gospel, Houston: Catholic Worker, May/June.
388
Ratzinger, Joseph & Marcello Pera (2006), Without Roots: The West, Relativism, Christianity,
Islam, New York: Basic, p. 72.
163
increasingly becoming suspicious of US intentions. The chaos in Iraq is making clear

that brutal military power is far less effective than its neocon supporters suppose. The
legitimacy of America as a global power ultimately rests on its ability to command
respect of other nations and cultures.389 It is worth recalling that the victory over the
Soviet empire was not secured by warfare, antagonism and dtente, but mostly
through the attractions of the Wests prosperity, freedom and democracy. Just as Pope
John Paul II decisively gave intellectual hope to anticommunist dissidents in the
East, so must theologians and economists alike engage in an intellectual competition
with the ideas of radical Islam.390
389
Harvard Professor Louise Richardson argues that waging a war against terrorists gives them the
status and the allies they crave. She argues that terrorists should be isolated from their supporters by
honoring western principles of civility. See: Richardson, Louise (2006), What Terrorists Want:
Understanding the Enemy, Containing the Threat, New York: Random House.
390
Neocon power reached its pinnacle during the 2004 presidential elections, when political strategist
Karl Rove orchestrated an enormous victory for the Republicans by energizing the hardline base. But
by the end of 2006, the neocon worldview has lost appeal and impact. The Democrats regained control
of the House and the Senate mostly by directly attacking neocon policies. Ever since, the neocon
illusion of an America with the military might and moral imperative capable of reshaping the world has
been overtaken by reality.
164
CONCLUSIONS
1. The Limited Usefulness of Mainstream Business Ethics Models
Contemporary business ethics has proven not to be a flashinthepan or yet another

passing phase of moral philosophy. Although it has a long, tangled and sometimes
problematic history, now it has decisively entered corporate boardrooms. The fact that
it is steadily gaining momentum, nevertheless, is not yet a test of validity. Although
business ethics is increasingly becoming an overused buzzword, it should be
considered as an effective boundary term, capable of linking disparate parties on the
basis of a common agenda. Due to the rapidly changing and dynamic environment in
which corporations operate, no definitive answers can be offered but several broad
conclusions can be reached from this study.
A first conclusion is that the roots of the dominant academic view in the contemporary
business ethics debate can be found in Adam Smith, Friedrich Hayek and Milton
Friedman. All three have made constructive and valuable contributions. However,
their assumptions are increasingly being questioned not only from within economics
but also from a wide variety of academic disciplines. Critics argue that not the
discipline of physics, but psychology and biology should be the main supplier of ideas
and explanations for economics in our fastchanging globalized societies. There is a
growing consensus that the world of finance is not about laws and ideologies but
about trends and tendencies. It is no longer plausible to argue that a corporation is
merely the private property of stockholders. It is too simplistic to argue that a free
market economy can only thrive in a Darwinian environment of relentless competition
and naked selfinterest. The assumption that business is intrinsically valueneutral
and governed by a body of scientifically based expertise, which requires a
businessman to override his personal moral scruples in the pursuit of efficiency and
effectiveness, has been buried. The neoliberal claim that corporations are simply
amoral does not make sense in a world in which corporations are making the largest
political donations, engage in political lobbying and launch massive public relation
campaigns. It is increasingly becoming clear that corporations shunning their broader
constituencies will eventually be ostracized.
A second conclusion is that mainstream business ethics should move beyond being
merely an apologetic discipline, aimed at improving the ethicality of business
activities in corporate boardrooms and business school manuals. The main excuse or
primary cause of corporate inertia lies in the false preoccupation with scientific
methodology. While rooted in philosophical positivism, a socalled scientific
approach is supposedly skeptical of any inquiry that cannot be readily quantified and
therefore discourages moral analysis. A false belief in the infallibility of Wall Street is
still a major obstacle. Investment bankers try to lull their corporate clients and general
public into a belief that rational forces drive financial markets. Econometric modeling
is still assumed to be the most accurate. The assumption that markets are mainly
driven by optimal rational behavior merely satisfies an entrenched human yearning
for simplification and is faulty.
165
In order to advance the debate, the science of economics should no longer be

considered as something exact, precise and rational. By the same token, ethics should
no longer be considered as something sloppy, vague, subjective, imprecise, and
emotional or based on a personal taste. When Ratzinger still served as Prefect of the
Congregation for the Doctrine of the Faith, he convincingly argued as follows: Moral
strength has not grown in tandem with the development of science; on the contrary, it
has diminished, because the technological mentality confines morality to the
subjective sphere.391 In order to overcome this situation, Ratzinger correctly defends
the need for a public morality. Along the same line, it is worth highlighting Amartya
Sen. The Indian philosopher and economist, who was awarded the Nobel Prize for
Economics in 1998, warns against the false asymmetry between the treatments of
business principles and moral sentiments in the freemarket model: Business
principles are taken to be very rudimentary (essentially restricted, directly or
indirectly, to profit maximization), but with a very wide reach in economic matters
(covering effectively all economic transactions). In contrast, moral sentiments are
seen to be quite complex (involving different types of ethical systems), but it is
assumed, that at least in economic matters, they have a very narrow reach (indeed, it
is often presumed that such sentiments have no real influence on economic
behavior).392 Finally, it is also worth recalling Hayeks own conclusions at the end of
his impressive career: I have come to feel more and more that the answers to many
of the pressing social questions of our time are to be found ultimately in the
recognition of principles that lie outside the scope of technical economics or of any
other single discipline.393 Hayeks words have not lost their meaning.
A third conclusion is that recent literature is still characterized by competing analyses

of business practices, which continue to attract the predictable ideologues and
apologists of utilitarian or deontological, libertarian or socialist and increasingly
contractarian categories. These diverging models continue to render the debate often
unintelligible. Contract theory exercises growing influence at universities and policy
thinktanks, and increasingly dominates contemporary practices governing corporate
finance and law enforcement. However, a close look at recent highprofile corporate
collapses, such as Enron, reveals that managers can relatively easy hide immoral
behavior behind sophisticated legal loopholes. International law is often too complex
and ambiguous to be implemented acrosstheboard. Private, marketfriendly
initiatives are often more effective and less costly than onerous governmental
regulation. Shareholder activism also brings huge benefits as it eliminates
inefficiency, disciplines lazy management and offers better opportunities for
managing risks. It is no coincidence that a key business principle of Goldman Sachs,
the worlds top global investment bank, includes that complacency can lead to
extinction. The antiglobalist assumption that corporations and society have opposite
or conflicting interests is therefore faulty.
391
Ratzinger, Joseph (2005), Christianity and the Crisis of Cultures, San Francisco: Ignatius Press, p.
27.
392
Sen, Amartya (1997), Economics, Business Principles, and Moral Sentiments, Business Ethics
Quarterly, 3, p. 5.
393
edition), p. 3.
166
A fourth conclusion is that not the moral but the business case is the main raison
dtre for business ethics in the marketplace. This is not necessarily bad. When a
corporation announces that it is doing something for the good of society, this is rarely
because of altruistic motives. It is the fiduciary duty of forprofit corporations to
spend money on ethical causes, only when they reasonably expect something in
return. There is nothing wrong with the fact that business ethics is often driven by
reputational damage control, a quest to gain access to customers or to get rid of
onerous regulations. In a globalized economy, more and more consumers claim that
their impression of a corporation is based on its reputation for social responsibility. At
the same time, it has become clear that although a corporation is not a public
institution sanctioned by the state in order to achieve some social good, it has only to
gain from being an exemplary citizen. Such proposition should appeal to business
leaders because ethics management is cheaper and more pervasive than compliance,
less costly in terms of lost trust and reputation. In the end, corporations require local
community support to maintain their license to operate. Business practices perceived
as wrong or outcomes that appear unfair will see their licenses revoked.
A fifth conclusion is that there is no clear consensus in the academic and business
worlds on what is exactly required for being considered socially responsible and
ethical. At the present moment, there is no widely accepted standard for CSR
performance. Some promising standards are emerging such as the UN Global
Compact and the Global Reporting Initiative but none have gained universal
acceptance and widespread implementation. More research is warranted because the
standards of the broad CSR universe are ambiguously defined. On the one hand, it is
difficult for corporations where to start or in which CSR area to focus. On the other
hand, it is too often impossible for a corporation to counter questionable media
allegations that it is socially irresponsible or acting unethical. CSR or business ethics
still remains too much an amalgam of descriptive, normative and instrumental
proposals, sometimes based on mutually exclusive or incompatible ethical,
sociological, political and economic theories. The resulting lack of consensus does not
necessarily reveal its fundamental weak nature. It is rather an example how much the
business ethics debate is alive.
A sixth conclusion is that mainstream business ethics is slowly but decisively shifting
away from Milton Friedmans outdated 1970s view, encapsulated in the title of his
New York Times Magazine article: The Social Responsibility of Business is to
Increase its Profits, towards Michael Porters more promising contextdriven
strategic CSR. Along the lines of Thomas Donaldson, Michael Porter and Roger
Martin, CSR should no longer be regarded as damage control or a public relations
campaign but rather as an opportunity, which requires dramatically different strategic
thinking. Porter convincingly argues that only if corporations were to analyze their
opportunities for social responsibility using the same frameworks that guide their core
business choices, they would discover that CSR can be much more than a cost, a
constraint, or a charitable deed and can become a potent source of innovation and
competitive advantage. The full integration of CSR into a core corporate strategy is
the only approach that will result in achieving longterm social and environmental
sustainability. Porters quest to shift CSR from a model pitting business against
society to one leveraging their interdependence is the biggest hope to ultimately
achieve success. Martins virtue matrix is especially wellplaced as a thinking tool
167
that can help a business executive strategically contemplate practical questions of

taking managerial action on CSR. Porter and Martins model are best placed to show
business leaders how to lead in taking beneficial action on corporate citizenship.
A seventh conclusion is that the relationship between business and ethics is often
profoundly paradoxical. Due to global corporate empowerment, the role of
corporations towards local communities and governments needs to be redefined, as
corporations have a crucial role to play in the fight against global warming, resource
depletion, biodiversity loss and other calamities. Socioeconomic tribulations in areas
of conflict such as rogue crime, massemigration and the Aids pandemic have the
potential to rapidly disintegrate the social fabric of highincome countries.
Corporations should receive legal incentives and be morally encouraged to become
more proactively involved in business ethics programs. Business ethics is not merely
about reactive compliance, but more about vision. Business ethics strategies should be
integrated and not decoupled from their core competencies. Such strategy can not
only potentially increase corporate profitability, improve its longterm prospects,
enhance its reputation, but also might serve the wider interests of civil society.
Corporations are not just instrumental but can be crucial in their contribution to the
public good. Harvards Ellsworth argues that the ideology of corporate purpose that
will dominate the twentyfirst century will be one that has legitimacy and acceptance
within society, unleashes latent human potential, generates greater total value and, in
a globalized world, travels well and intact across cultural boundaries. Only one
purpose meets these requirements serving customer needs while placing high
priority on employees development and satisfaction.394 The academic world has
taken notice that business ethics pays off.
An eighth conclusion is that there exists a freemarket and business ethics paradox.
On the one hand, there is substantial empirical evidence that a probusiness, free
market society is the most powerful instrument to enhance prosperity. The spirit of
enterprise or pursuit of selfinterest is the basis of such economic system. On the
other hand, however, such system can only be successful if powerful moral and legal
restraints are in place. In addition, by bringing ethics into business, one can make a
case for moral commitment. In the first place, by bringing ethics on board,
corporations are less inclined to turn a blind eye to stakeholders. Secondly, it might
increase whistle blowing on the work floor. Thirdly, it might provide the corporation
with a competitive advantage. Fourthly, the fact that moral issues are taken into
consideration increases the odds ethicallyacceptable solutions can be found and
implemented. Fifthly, by voicing concern, corporations and employees avoid falling
into the trap of complacency. However, by bringing business into ethics, one runs the
risk of instrumentalizing ethics. Secondly, corporations and employees can foment
opportunistic behavior. Thirdly, corporations run the risk of crowding out voluntary
commitment.395 Due to these paradoxes, ethics management will continue to walk the
394
Ellsworth, Richard, R. (2002), Leading with Purpose: the New Corporate Realities, Stanford
University Press. Quoted in: London, Simon (2002), The Third Way for Business Priorities,
Financial Times, December 18.
395
Louvain Professor Luk Bouckaert argues as follows: By creating new regulations to temper
opportunistic behavior within and between organizations, we may temper the symptoms but often
reinforce the underlying roots of opportunism. Bouckaert calls this the paradox of ethics management.
See: Bouckaert, Luk (2002), Humanity in Business, paper presented at the European Ethics Summit,
Brussels, August 2930, p. 10. See also: Bouckaert, Luk (2006), The Ethics Management Paradox
168
small path between morality and moralism. The paradoxical nature of business ethics
reveals its rather limited usefulness.
A ninth conclusion is that the best way for a corporation to tackle the business ethics
paradox is to proactively embrace notions like corporate citizenship, fiduciary
responsibility and democratic accountability.396 Alluding to corporations in terms of
citizenship does not imply that corporations are de facto citizens or have citizenship,
but that their socioeconomic impact on society should be understood in terms similar
to that of citizens and citizenship. Contemporary business ethics models (Donaldson,
Porter and Martin) have demonstrated that the development of a sense of moral
obligation among business leaders and employees is crucial. This creates a window of
opportunity for moral theologians because these qualitatively different notions are
directly inspired on theological concepts, such as stewardship, cocreation and
human dignity.
and When More Ethics Create Less Ethics Some Further Clarifications on the Ethics Management
Paradox, in: Zsolnai, Laszlo (editor), Interdisciplinary Yearbook of Business Ethics, Oxford: Peter
Lang.
396
In recent years, corporations, including CocaCola and ExxonMobil, have enthusiastically
embraced the notion of corporate citizenship but have been reluctant to readily accept a role in
participating for the civic good when solutions are not pointing to their benefit. Other corporations,
such as Novartis and Pfizer, are ahead of curve as they are already living up to a citizen role,
highlighted by their voluntary initiatives to set up pro bono research and development facilities to fight
tropical diseases.
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2. Assessing the MoralTheological Contributions to the Debate
The central thesis has been that the discipline of business ethics yields a richer
dialogue and becomes more relevant by confronting it with a moraltheological
perspective. This study has nevertheless demonstrated that it is not easy to present a
consistent and coherent moraltheological perspective on business ethics. Instead of
preaching prophetic morality, moral theologians too often resort to pharisaic
moralism. It has become clear that a business ethics debate placed in a moral
theological perspective is full of pitfalls and potholes. Several broad conclusions can
be reached.
A first conclusion is that official CST, as promulgated by the magisterium, mostly

embodies a coherent body of principles and worldviews, which are highly relevant for
the contemporary business ethics debate. Unlike liberation theology or neocon
theology, official CST cannot be characterized as either leftwing or rightwing. On the
one hand, consistent with liberation theology, CST is highly critical of the tendency of
the free market to promote materialistic consumerism and to instrumentalize human
persons. On the other hand, consistent with neocon theology, CST is highly critical of
the role of governments. Overall, however, CST cannot be captured along an
ideological axis as its philosophical premises are not rooted in secular political theory.
A good example is the principle of subsidiarity: CST defends a vigorous role for
government in promoting social justice (Sollicitudo Rei Socialis) and dignity of work
(Laborem Exercens). A more leftwing or rightwing interpretation of CST is therefore
often biased, arbitrary, superficial and highly selective. The tendency of liberation and
neocon theologians to present their ideologicallydriven views as a genuine or the
most genuine expression of CST is misleading. The principle of subsidiarity in the
context of official CST demands that coercive state intervention or imposed
governmental measures are only justifiable as a last resort.
A second conclusion is that by defending a freemarket, probusiness economic

system, not only with arguments of economic efficiency and effectiveness, the
magisterium provides it with a moral backbone. There is empirical evidence that a
freemarket, probusiness system, circumscribed within a strong juridical framework
at the service of human freedom and ethical and religious at its core, is indeed the
biggest hope for a society to prosper. This has rightfully been argued by Pope John
Paul II in his groundbreaking encyclical Centesimus Annus, which was unmistakably
inspired on the writings of Friedrich Hayek and influenced by Michael Novak.
Key insights of Populorum Progressio and Octogesima Adveniens, which liberation

theologians unconvincingly use to preach wholesale reform of capitalist economies
from international trade and finance to development aid policies as the ultimate
solution for solving material poverty have turned out to be outdated. Empirical
evidence suggests that wellperforming economies over the long term owe their
success not to revolution or overseas aid, but to a culture and institutions that foment
or generate marketoriented incentives, protected property rights, and social stability.
The Compendium of the Social Doctrine compellingly reinforces and strengthens the
170
case for a freemarket system by arguing that creativity and cooperation are signs of
the authentic concept of business competition.
A third conclusion is that official CST deserves a lot of credit for having remedied an
important deficit in neoclassical and most other secular economic theories, often
characterized by an insufficient attention to ethical dilemmas and the anthropological
dimension. CST correctly warns against mainstream economic and political models,
which reduces socioeconomic relationships to merely contractual, legal or monetary,
devoid of moral content. Consistent with the writings of Hayek, official CST
persuasively sees a more virtuous role for charity than wealth and income
redistribution through taxation because it is based on love and not coercion. Overall,
the magisterium has been the most consistent voice in the debate.
A fourth conclusion is that the two examined contextual theologies Latin American
liberation theology and North American neocon theology avoid addressing the
technical questions that constitute modern economic theory. Both camps only seem
concerned with the broader issues of the way in which economics relates or ought to
relate to human efforts to overcome poverty and enhance wellbeing. Both argue that
liberation and liberty are decisive sites where God can be recognized: in human
striving for liberation and yearning for liberty, we gain access to knowledge of God.
The quest for liberation and liberty is comparable as both contextual theologies try to
overcome socioeconomic misery, political tyranny, cultural alienation and
oppression of conscience. Both schools of thought rely on an analogia libertatis to
identify Gods presence in the world. Biblical liberty is interpreted as freedom from
sinful structures. The two contextual theologies moreover agree that historical liberty
presupposes that humanity consciously assumes responsibility for its own destiny. But
here most analogies end.
At the level of ideological application, the two schools of thought drift in opposite
directions. The biggest difference between liberation theology and neocon theology
resides in its main objective or ultimate concern. Whereas liberation theology
interprets theology as a vehicle of emancipation or liberation, neocons see theology
as a language of moral foundation or legitimation. Whereas liberation theology is
predominantly utopian in character, neocon theology is more characterized by its
apologetic nature. While liberation theologians mostly condemn the freemarket
model as idolatry, neocons defend or glorify the same model on theological premises.
A fifth conclusion is that a concern for justice and life itself as the ultimate criterion
for judging economics can be considered as a specific contribution of Latin American
liberation theology. Among the most valuable contributions of liberation theology are
its local and often intensely personal stories. Poor people are not treated as objects or
abstract consumers but rather as subjects or human persons: they are given a voice. Its
dialectical method between the socioanalytic and hermeneutic mediation, between
social sciences and theological contemplation, has placed the debate in a qualitatively
new perspective. The methodology of liberation theology remains as valid, useful and
urgent as ever before. Liberation theology rightfully argues that a prophetic critique
of unjust socioeconomic structures is a central role of moral theology.
171
Its bedrock principle, the preferential option for the poor, remains essential and
urgent. Although the concept has been cautiously embraced by the Vatican and the
CELAM, they have rightfully changed it to become a preferential and evangelical
option, underlining that it eventually is not about political commitment. Liberation
theology has also produced significant theological breakthroughs on structural sin or
sinful structures: peccatum mundi as a social reality and salvation as a multi
dimensional process. Unbridled capitalism and market idolatry at the expense of
human dignity is theologically qualified as sinful. However, by treating sin as an
abstract, structural, systemic or broad social reality, liberationists have obscured the
concept of personal accountability.
A sixth conclusion is that the almost total absence of strict economic analysis in the
writings of key liberation theologians exposes an anomaly. Liberation theologys
initial quest for an epistemological rupture has created false expectations. Judged
from the space allotted, economics has not been a central theme of liberation
theology. Even worse, liberation theologians erroneously belief that decisive
liberation will only be achieved if liberated from multinational corporations, private
property and globalization. Liberation theologians end up applying an economic
instead of a theological analysis of development.
A seventh conclusion is that the shortcomings of the strict economic content of

liberation theology become evident if compared to the latest insights of contemporary
development economics and business ethics. In their ideological zeal to apply ethical
and theological notions to economics, liberation theologians have not paused to first
study economics qua economics. The central issues of economic development theory
are not addressed or erroneously downplayed as bourgeois interests. Unconvincingly,
selfinterest is too often regarded as synonymous with greed or selfishness. Corporate
economic activity is treated with deep suspicion, and arrogantly downplayed as
materialistic or imperialistic. Liberation theologians condemn the tendency of the
freemarket system to convert human beings into commodities but little reference is
made to empirical data. In return, autocratic, utopian regimes in Latin America are
hailed as prophetic.
The shortcomings have led to serious blind spots. Liberation theologians must move
beyond general, abstract indictments of globalization and neoliberalism to the
development of specific analyses and pastoral guidelines for action, not only at the
macroeconomic but also and even more urgently at the microeconomic level.
Addressing technical economic issues such as microfinance, job incentives and
basic needs provisions might be too much to address in all their details, but the
neglect of the economic dimension at the level of practical policy implementation has
serious consequences. Liberationist naivet has led to social alienation. A just cry
against material poverty combined with ignorance about the economic theory has too
often turned into an illegitimate rage against wealth and prosperity, as though poverty
in one place is caused by wealth in another place. Liberation theologians erroneously
oversimplify socioeconomic development as a zerosum game, in which wealth and
income redistributions are glorified as the panacea. Such statements are superficial at
best and dangerously misleading at worst.
172
An eighth conclusion is that although the autonomy of socialanalytical sciences

such as economics, sociology, psychology and anthropology is theoretically
affirmed by mainstream liberation theologians, the criteria to select socioanalytical
tools are mostly based on an outdated ideology critique. As their socioeconomic
mediation is mostly based on false assumptions and outdated Marxist and
dependencia worldviews, liberation theology has been unable to establish viable
historical projects. Latin Americas rather turbulent socioeconomic and political
recent history is a clear evidence that liberationist utopia has only served a few.
Christian socialist projects in Castros Cuba, Ortegas Nicaragua and Aristides Haiti,
widely blessed by liberation theologians, have been incapable of sustained economic
growth, social development and culturalpolitical freedom. Regimes backed and
blessed by liberation theologians have mostly proved adept at creating social activities
with marginal significance to its original purpose.
Overall, liberation theology has failed to inspire as it has mostly remained stuck in
abstract speculation about arbitrary ethical rules and boundaries of doing business.
Even though Pope John Paul II recognized the fundamental and positive role of
business, the freemarket and private property in Centesimus Annus, liberation
theologians continue to believe in the opposite. Liberation theologians fail to unlock
the richness of official CST, mostly ignoring or downplaying the rich guidelines of
Sollicitudo Rei Socialis and Centesimus Annus. These magisterial documents link the
theological notion of solidarity to economic participation and not to antibusiness
sentiments with which this theme is mostly associated by liberation theologians. The
more recent documents of the magisterium convincingly emphasize that solidarity is
achieved through inclusion into the business economy and not so much through
wealth distribution. Liberation theologians ignore this key insight of Centesimus
Annus and stick to the rather outdated Gaudium et Spes of the Second Vatican
Council of 1965, which still argued that poverty ought to be resolved chiefly through
wealth distribution instead of wealth creation. It is more fruitful to regard those
excluded or marginalized from economic activity in terms of their potential and
opportunity and not merely as passive victims. Liberation theologians ignore the
insights of contemporary business ethics manuals, where the theme of solidarity is
gaining ground through the concept of social capital.
Selective reading of the documents of the magisterium by liberation theologians

should be regarded as a sign of weakness. It is deplorable that so many liberation
theologians resort only to those parts of the encyclicals that support their own
perspectives and ignore those that critique it. By mostly using the inductive approach,
liberation theologians too often read their own experiences into the Bible. Exegesis
here becomes eisegesis. The popular idea among liberation theologians that theology
is always contextual or situational has led to selective and arbitrary interpretations.
Gustavo Gutirrez and Leonardo Boffs proposed turn to spirituality is necessary to
stem the exodus to Pentecostal churches, but cannot be an excuse to downplay the
sociopolitical and economic analysis.
A ninth conclusion is that by downplaying mainstream business ethics and

condemning it as an ideological smokescreen, which supposedly only supports
bourgeois interests or the status quo, liberation theologians effectively place
themselves outside the debate. The rejection of business ethics as an illusion of a
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possible compromise, typical of the middle class that has no historic destiny, is
unwarranted and needs to be revised. Engaging in a dialogue with the business
community rather than polarization is a better tactic in going forward. A moral
theological perspective on business ethics cannot be based on mere naive desire to
help. Compassion alone is not enough to advance the cause of the poor. One can have
a good grasp of the social situation, but that makes strong empirical analysis only
more urgent. In other words, the sincerity of liberation theologians might be
impressive, but it is not effective as they are somewhat careless in their social science.
A tenth conclusion is that the lack of a rigorous application of the socioanalytical

mediation, which means a constructive role for the social sciences in the imagination
and concretization of historical, viable projects, has hindered the achievement of
religious liberation, social emancipation and economic development. In order to
remain relevant, liberation theologians should therefore reformulate their
methodology. Liberation theologians can recover the idea of a historical project by
refocusing on a key foundational text. Cldovis Boffs doctoral Louvain thesis should
be revisited because in the definition of the relationship between the socioanalytical
and hermeneutic mediation lies the capacity to construct historical projects. By
consistently applying Boffs methodology, liberation theology will become more
successful in constructing historical projects. The lack of a consistent and coherent
application of Cldovis Boffs methodology in more recent writings of liberation
theologians is therefore both a symptom and a cause of its current impasse. The
decline of liberation theology is mostly selfinflicted. On several theological,
ideological and sociological grounds, the liberation theology thesis fails. Liberation
theologians should burry the dependency theory altogether and start to incorporate the
latest insights of development economics and elaborate on the frameworks of business
ethics, such as Roger Martins virtue matrix and Michael Porters contextdriven
strategic CSR.
An eleventh conclusion is that radical leftwing populist discourse, with its outright
attacks on neoliberalism and freetrade agreements, antiglobalization rhetoric and
focus on income redistribution, owes much to liberation theology. It is through these
grassroots social movements which have mostly proven adept at creating social
activities with marginal significance to its original purpose that the legacy of
liberation theology lives on. It also lives on at the university campuses where Latin
American liberation theologians were educated. Against all odds, even the Catholic
University of Louvain, Belgium, where Gustavo Gutirrez studied and Cldovis Boff
and myself conducted our doctoral research, continues to be a safe haven and
stronghold of liberationist thought.
A twelfth conclusion is that the neocon theologians Novak, Neuhaus and Weigel are
persuasively building upon and moving beyond the theories of Smith and Hayek in
their ultimate objective to provide a spiritual foundation, moral legitimation and
direction to the freemarket economy. All three neocons regard CST as crucial to
provide guidance. Unlike liberation theologians, the neocons compellingly defend the
possibility of common ground between Christian ideals and a freemarket, pro
business economy. Neocons convincingly argue that without certain personal virtues,
moral and spiritual dispositions, neither basic human rights can be upheld, nor a
dynamic capitalist economy can thrive or survive. Neocon theologians accurately
174
argue that politics is crucial in the economic equation, for without strict law
enforcement and limited government, economic progress will be hampered. Neocons
are correct that social and economic rights can only be sufficiently defended by
internalized habits and institutions that incorporate checks and balances. Business
ethics indeed eventually depends on personal initiative, the habit of enterprise and the
ability to inspire trust in others. The main drivers of economic development are not
exploitation, exclusion and dependency, as preached by liberation theologians, but
more decisively creativity, entrepreneurship and enterprise, as advocated by neocons
theologians. Not grand government schemes in a topdown model, but rather a
bottomup approach is most likely to advance socioeconomic prosperity.
A thirteenth conclusion is that neocon theologians too often operate as legitimists of

the status quo. Their writings too often repeat Max Webers thesis that wealth is a
blessing and material poverty a curse in a nave and uncritical way. While liberation
theologians excel in showing compassion, neocon theologians often lack nuance. The
examined Catholic neocons too often reduce grace to profit maximization and present
charity as a structural answer. While charity should indeed be regarded as a necessary
Christian virtue, it cannot be defended as an economic solution to the problem. This
study has demonstrated that there is an important difference between a corporation
making a profit and absolutely maximizing shareholder value. This distinction is
crucial as a blind pursuit for the largest profit possible should be rejected as immoral.
A fourteenth conclusion is that the neocon attempt to square Catholic teaching with
the American economic model is controversial. The notion that America has a special
vocation and a divinely ordained mission might seem plausible for Americans but
does not make the heart beat of people living beyond Americas borders. Neocons
spend too much time on building an Americanized Catholicism, a religion that
revolves around unbridled capitalism and the power of the CEO, at the expense of
Christianitys traditional mission of social justice.
A fifteenth conclusion is that only the mainstream versions of the examined

contextual theologies are valuable for the business ethics debate. The more radical
elements in liberationist and neocon interpretations have to be rejected as
counterproductive, utopian and moralistic. Both contextual theologies too often fall
victim to fundamentalist, biased or outdated worldviews. Both schools of thought too
frequently apply a liberal view of Scripture that sees only those parts of the Bible as
inspired that fits their ideological agenda. Whereas the liberationists overemphasize
social and economic rights, the neocons undervalue them. While neocons remain too
silent on the rights issue, liberationists mostly fail to appreciate the entrepreneurial
spirit. In the area of business and foreign affairs, liberation theologians are in favor of
a morality based on the Sermon of the Mount (Matthew 57). Neocons, however,
argue that such morality would result in bad theology and dangerous politics.
From a more sympathetic viewpoint, one could argue that while liberation theology
emphasizes the Parable of the Good Samaritan (Luke 10:2537), neocon theology
reiterates the Parable of the Talents (Matthew 25:1430). The promotion and
legitimation of wealth redistribution or entrepreneurial spirit can respectively be
based and inspired on those specific passages. It is however too simplistic and
dangerous to transform an interpretation of a passage from Scripture into dogma. The
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flaws and anomalies in both contextual theologies show that moral theologians need
to be careful not to politicize their epistemology. This study has demonstrated that the
theocratizing of business ethics is dangerous as biblical teachings do not exactly tell
us how to effectively run corporations or contemporary business ethics programs.
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3. Catholic Social Teaching in the Corporate Boardroom
By directly confronting moral theology with business ethics, it becomes clear that
many of the core insights of the contemporary business ethics models have their
antecedents in official Catholic social teaching (CST). This study has demonstrated
that several key insights in the most promising contemporary business ethics models
rest on an unacknowledged debt to official CST. Obviously, this is not to say that all
CSR is based on CST. However, as a matter of intellectual history, it is important to
realize where most concepts originated. Core ideas of Thomas Donaldsons
integrative social contract model, Michael Porters contextfocused strategic CSR
model and Roger Martins virtue matrix can be regarded as secularized versions of
Christian ideas. The alignment between Donaldson, Porter and Martins models and
CST can be drawn out into seven different areas. After underscoring the
communalities between CST and these three CSR models, each model will be
highlighted separately.
In the first place, the magisterium and all three academics reject Milton Friedmans
assumption that the basic social responsibility of business is merely to increase its
profits. From the outset, all correctly reject the flawed thesis that the business of
business is business and acknowledge the existence of something beyond the market.
All agree that freedom of action in the unfettered freemarket economy is not a
license for inhumane and abusive working conditions. All condemn unethical
corporate business practices as a lack of authentic freedom. The magisterium and the
three academics consider profit as a necessary measure of efficiency and not as the
very purpose of a corporation itself. All agree that the role of profit albeit legitimate
should never be the sole objective of a corporation, but instead should go hand in
hand with the objectives of social usefulness and longterm sustainability.
In the second place, along the same lines as official CST, all three academics reject
the idea of homo oeconomicus, as if man only moves through life seeking to satisfy
his preferences. For example, Porter argues that business has strong moral purpose:
By providing jobs, investing capital, purchasing goods, and doing business every
day, corporations have a profound and positive influence on society.397 In treating
customers as ends and not merely as means to the corporate profitability criteria, the
contemporary business ethics models of Donaldson, Porter and Martin adhere to the
core principle of CST, which is the dignity of the human person. There is an
agreement to reject a pure utilitarian approach to business. In theological or CST
terms, human beings are regarded as cocreators with God. In economic or CSR
jargon, greater involvement and direct participation of end clients in the market
economy creates value. All worry about the growing tendency of the anti
globalization movement to identify corporations as prime actors in the racetothe
bottom, in which corporations are seen as an affront to solidarity. Such identification
is based on a flawed perception.
397
Advantage and Corporate Social Responsibility, Harvard Business Review, 12, p. 91.
177
In the third place, both the magisterium and the three academics equally reject the
assumption that the economic realm has supremacy.398 The basic assumption is that
the human resource eventually is the greatest resource in the business equation. The
centrality of human dignity that must be affirmed in every human person is a non
negotiable premise for CST. As argued in the Compendium of the Social Doctrine:
The poor should be seen not as a problem, but as people who can become the
principal builders of a new and more human future for everyone.399 The elimination
of material poverty is not just a moral imperative but should also be considered as a
necessary component of sustainable development strategies: economic inclusion is
highly profitable for both society and corporations. Continuous upgrading of human
or social capital, which is often a key part of CSR programs, is consistent with CSTs
call for integral human development. There is clearly a common interest discernable
between CST and CSR of the crucial importance to invest in human capital.
In the fourth place, the three academics and the magisterium agree that not a
redistributionary but rather an entrepreneurial concept of social justice should be
promoted. Social justice cannot be based on a violation of property rights. Corporate
governance cannot take the form of bureaucratic corporate government, but should
rather be based on a business philosophy driven by incentives. From an ethical and
philosophical point of view, all agree that the entrepreneurial spirit suffers if wealth
redistribution policies are too much advocated. Instead, all emphasize the tremendous
capacity for innovation, which is inherent to the human being. In theological
terminology, the use of human talent is a means of sharing in the creative act of God.
Strategic CSR stands in line with the CST regarding the principle of subsidiarity in
which people are expected to be responsible, to the extent possible. In sum, the most
just society is a society that most convincingly knows how to promote the spirit of
enterprise. A career in business should therefore also be regarded as a serious moral
vocation. In this sense, the spirit of Friedrich Hayek is very much present in the latest
social encyclicals of Pope John Paul II and Pope Benedict XVI and the CSR models
of Donaldson, Porter and Martin.
In the fifth place, what emerges in the writings of the three academics and CST is a
warning not to get lost in a utopian view of society, completely detached from the
moral and spiritual motivations of the human person. In other words, what transpires
is a warning against economic planning or reliance on State intervention as the best
way to achieve social progress. Neither rationalism nor scientism, but rather co
creation and entrepreneurial spirit are considered as the main contributors to socio
economic progress. There is agreement that the best way to achieve this is through a
bottomup approach and not by means of bureaucratic topdown planning. The
bottom line in the writings of the three academics and contemporary CST is that
poverty can be overcome best if poor people are allowed into the circle of
development. A full integration into the probusiness, freemarket economy is the
398
This makes sense not only from the theological viewpoint but also from the pure economic
viewpoint. Renowned business management professors Collins and Porras argue that visionary
corporations pursue core values and sense of purpose beyond making money. In addition, they argue
that paradoxically, they make more money than the more purely profitdriven comparison
companies. See: Collins, James & Jerry Porras (1996), Built to Last: Successful Habits of Visionary
Companies, London: Century, p. 8.
399
25, 449.
178
best hope for the poor. CSR is more than a boxticking exercise and indeed capable of
potentially enhancing the common good of society.
In the sixth place, the magisterium and the three academics agree that CSR is not a
charitable addon, but an integrated core business activity. The responsibility of a
corporation includes environmental stewardship, the prevention of labor inequalities
and noncooperation with racist and oppressive regimes. All agree that the law is a
blunt instrument not designed to be tested constantly on the edge. A key problem in
the corporate scandals involving Enron, WorldCom, Ahold and Parmalat, for
example, was the fact that most complied with the letter of the law but violated its
intent. Instead, the laws of corporate governance should create structures, incentives
and penalties to ensure stewardship, social awareness and accountability. In short, all
agree that corporations cannot derive their legitimacy from blindly increasing
shareholder profitability but should rather focus on longterm economic and social
sustainability.
In the seventh place, while fully secular in origin, the three highlighted CSR models
provide a set of valuable analytical tools that can help CST move from general moral
exhortation to concrete guidelines. The three CSR models are valuable as a tool how
CST can be made operational. The magisterium correctly acknowledges that the
Church does not propose or establish economic systems, but that it has a
responsibility of orienting and influencing society by means of her teachings.
However, CST can provide the corporate agenda greater moral and spiritual weight
and conviction. The three examined CSR models and official CST are therefore
complementary. In that sense, there should be no tension between career and calling.
Whereas the former has a business and the latter a religious connotation, both
concepts should be mutually reinforcing.400
Thomas Donaldsons integrative social contract model is consistent with the

teachings of Pope John Paul II and Pope Benedict XVI in arguing that a corporation
has an obligation to avoid harming, being unfair to or unjust with its stakeholders and
other members of society. Donaldsons hierarchy of norms with global hypernorms
being the highest form to which a corporation must comply is therefore consistent
with CST. The most visible global manifestation inspired on Donaldsons model is
currently the UN Global Compact. Its very name implies a hypothetical, implicit,
social contract. However, it should also be stressed that like the general guidelines of
CST, Donaldsons integrative social contract model creates overly abstract goals for
managers. Martin correctly warns that the social contract models have more utility
for opposition of corporations antibusiness NGOs and governments who can use
it as a legitimizing framework to criticize corporate behavior. However, social
contract models appear to be of little utility to CEOs in attempting to go beyond basic
stockholder oriented behavior to be better corporate citizens.401 Hypernorms such as
fairness and justice are often too abstract notions with no implicit agreement among
parties how to apply them.
400
For interesting insights on business as a calling and the calling of business, see: Van Hoogstraten,
Hans Dirk (2003), Reclaiming the Concept of Calling, Bilbao: Universidad de Deusto (Fifth
International Symposium on Catholic Social Thought and Management Education).
401
Martin, Roger (2005), Corporate Citizenship: Whats a CEO to Do? Draft paper for Aspen TIP
Conference, Monterrey, Mexico, January, p. 14.
179
Michael Porters key insights are also consonant with the moral teachings of the
magisterium in reiterating that NGOs, governments, and companies must stop
thinking in terms of corporate social responsibility and start thinking in terms of
corporate social integration. The magisterium and Porter both argue that the
remedy is economic participation, or in encyclical jargon entering the circle of
exchange (Centesimus Annus 34). Porter argues that when a wellrun business
applies its vast resources, expertise, and management talent to problems that it
understands and in which it has a stake, it can have a greater impact on social good
than any other institution or philanthropic institution.402 This study has demonstrated
that the groundbreaking encyclical Centesimus Annus already anticipated much of
Porters thoughts, by stressing that a corporation should be regarded as a creator of
wealth.
Roger Martins virtue matrix is equally inspired on key insights of CST. Martin
emphasizes the importance of the matrix as it helps business leaders understand what
generates ethical conduct. Martins top two quadrants of the matrix, the strategic and
structural frontiers, encompass those activities, which have the highest potential for
generating tangible value. It can be argued that such activities are closely related to
the core principles of CST, such as common good, stewardship, spirit of enterprise
and subsidiarity. Martins virtue matrix is a valuable instrument to make a CSR
blueprint operational, which is intrinsically based on key CST principles. Martins
quest to average up the worlds civil foundations can be regarded as a practical
application of CST. Martins quest for social entrepreneurship, which in his view is
intrinsically linked to social activism, is also consistent with Pope John Paul IIs
words in Centesimus Annus: But it will be necessary above all to abandon a
mentality in which the poor as individuals and as peoples are considered a burden,
as irksome intruders trying to consume what others have produced (28). At the
same time, Martin complains that the most significant impediment to the growth of
corporate virtue is a dearth of vision among business leaders. The shortage of
imagination and intrinsic motivation among business executives can be overcome by
looking more deeply into CST.403
In sum, Donaldson, Porter and Martins business ethics models are complementary to
and mostly consistent with the core CST teachings of the spirit of enterprise. Whereas
the three academics stress the link between competitive advantage and CSR, official
CST complements such view, emphasizing that business excellence can be inspired on
moral and spiritual principles. The added value of CST is not necessarily to morally
justify a probusiness economic system, but to reinforce and reinvigorate it
spiritually. Equally important, the three highlighted models address the gap between
core CST principles and actual business practices. Porter and Martins frameworks
embody many key CST principles and are therefore wellplaced as thinking tools that
can help business executives to think through practical questions of taking action on
CSR. Their frameworks leave no doubt that CSR is not confined to welfare, altruism,
charity or philanthropy but that it has become a key component in a corporations
402
Advantage and Corporate Social Responsibility, Harvard Business Review, December, p. 14.
403
Martin, Roger (2002), The Virtue Matrix. Calculating the Return on Corporate Responsibility,
Harvard Business Review, March, p. 10.
180
competitive strategy. Although welfare, altruism, charity or philanthropy can be

regarded as core Christian virtues, they cannot be defended as the economic solution
to the problem. Instead of defensively defining CSR as a licensetooperate or a PR
campaign, it should be regarded as proactively aimed at integrating business and
society.404
404
For additional insights in how CST should be integrated in an economics curriculum, see: Barrera,
Albino (2003), Catholic Social Thought in an Economics Curriculum, St. Paul, MN: University of
St. Thomas (Catholic Social Thought across the Curriculum Congress). In this conference paper, the
author interestingly notes that by incorporating CST in an economics curriculum, not only do we keep
undergraduates apprised of how moral theology fits in with their profession, but we also ensure that
those who eventually move on for Ph.D. training and eventually become economics professors
themselves are familiar with the potential contribution of Catholic social thought to economics.
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4. Challenges for Moral Theologians and Business Ethicists
The most pertinent Gospel passage for the business ethics debate remains as urgent as
ever before: What does it profit a man, if he gains the whole world, but suffers the
loss of his own soul? (Matthew 16:26) This key insight of the New Testament
reflects the Old Testament: Better is a little with righteousness than great revenues
with injustice (Proverbs 16:8). Moral theologians and business ethicists are
continuously challenged to address this intriguing question. Although moral
theologians do not address the technical questions that constitute mainstream
economic theory, this study has demonstrated that they should be more concerned
with the broader issues and ramifications of the way in which business corporations
relate to the historical experience of humanity in general.
This message is being taken to heart at the grassroots level. One of the great strengths
of the Roman Catholic Church is the wide reach and range of its movements who are
bearing witness at the local level. From Christian base communities in Brazil, to local
Pax Christi chapters in the United States, to kampong ministries in Indonesia, they are
all incarnations of the same ultimate discernment. It is in these incarnations that
Catholic social teaching gains credibility and relevance. However, more ought to be
done to integrate the challenges posed by business corporations into the moral
theological discourse. This brings me to the final part of this occasional paper, which
consists of defining the most urgent challenges ahead for moral theologians in the
business ethics debate.
In the first place, moral theologians are continuously challenged to establish semantic
innovation. Theology is not primarily about morally justifying an economic system,
but rather to spiritually reinforcing and reinvigorating the purpose of business. In the
context of business ethics, this means that moral theologians should help define
aggregate measures of economic performance. Moral theologians should capitalize on
the fact that the concepts of business ethics, as defined by Donaldson, Porter and
Martin, have redefined corporate strategic objectives in recent years. Whereas
economists and corporate strategists are necessarily preoccupied with efficiency,
expediency, growth and profit maximization, theologians should place these business
criteria in a broader theological perspective. The main variables in the equation of
economic analysis from a theological viewpoint are anthropological in character:
human beings cannot be reduced to pure consumers, whose sole value would be
measured by utility.
In the second place, moral theologians are equally challenged to establish semantic
vigilance.405 Moral theology, as fides quaerens intellectum, has an important task to
405
I am following the line of argument of Johan Verstraeten, who argues as follows: Catholic social
thought not only produces semantic innovation but also a semantic vigilance: it adopts a critical attitude
towards all sorts of perversion of meaning. By disclosing a different hermeneutic horizon, powerful
enough to break open the narrow hermeneutic horizon of the time in which we live, biased or
ideological interpretations and misrepresentations flowing from the dominance of instrumental
rationality, disconnection, mental walls, and the bifurcation of the world in terms of a clash of
civilizations. See: Verstraeten, Johan (2006), Catholic Social Thought as Discernment, Logos, 8, pp.
94111.
182
critically examine ethical assumptions, which legitimize claims and rationalizations in

corporate conduct. A moraltheologically inspired perspective of business should
provide critical leverage against the pervasive dominance of normative business ethics
models, which erroneously assume that there is an objective body of knowledge that
can be mastered by essentially anonymous moral agents in pursuit of certain
attainable and quantifiable goals. Economic concepts like profitability, marginal
utility and shareholder value all assume implicit morality. Uncovering their hidden
ideological assumptions has traditionally been a task of moral theologians. Moral
theologians are wellplaced to confront business with their historical relativity and
reveal the credos behind economic assumptions. This is crucial because without
morality, more regulation will not work.
According to Verstraeten, instead of legitimizing or affirming the status quo of

conventional market thinking, moral theologians are challenged to offer a new and
humanizing hermeneutic horizon.406 He convincingly argues that preparadigmatic
thinking is possible thanks to the discovery of inspirational and semantically
innovative rootmetaphors.407 Christianity or Judaism can indeed provide inspiration
in a process of remetaphorization. One of the remetaphorization proposed by
Verstraeten is to shift from the image of the invisible hand, which is a rootmetaphor
for a society based on collective individualism, to the image of an invisible
handshake, which can be regarded as a rootmetaphor of a society based on solidarity
and justice.408 Such approach follows closely Gutirrezs renewed emphasis on
recovering the rich cultural heritage, the anthropological narratives and spiritual
resources of the poor.409 Along the same lines, Stackhouse calls for a modulation of
Christian ethics by recalling and recasting the deeper theological resources, now
widely forgotten, that have shaped contemporary economic life.410
It is indeed by critically shaping and enriching the debate that moral theologians can
play a constructive role in the business ethics debate. According to Verstraeten,
business ethics is neither a restrictive straightjacket, nor a simple problemsolving
recipe. Rather, it is an approach that, in light of the tension between norm and reality,
vision and limitation, allows for the creation of a space of freedom.411 In other
words, business ethics in its most elementary form should be a science des moeurs,
an investigation of the factual opinions, values and behavioral patterns of business
people, managers and employees, as well as the factual consequences of ethical or
unethical behavior in business enterprises.412 In ultimate instance, moral theologians
should be a consistent voice of conscience. If moral theologians want to ignite a
transformation of conscience in the corporate world, they are challenged to explore
406
Verstraeten, Johan (2003), Business as a Calling or the Calling of Christians in Business. How
Faith Makes a Difference, Louvain: European Ethics Network.
407
Verstraeten, Johan (1998), From Business Ethics to the Vocation of Business Leaders to Humanize
the World of Business, Business Ethics: A European Review, 2, pp. 121122.
408
Verstraeten, Johan (2005), Catholic Social Thought as Discernment, Logos, 8, pp. 106107. See
also: Van Gerwen, Jef (1986), Root Metaphors of Society: Linking Sociological and Moral
Theological Analysis, Louvain Studies, 11, pp. 4159.
409
Gutirrez has proposed to establish an innovative crossfertilization between the Exodus narrative
and the experience of the poor in Latin America.
410
Max Stackhouse is a Professor of Christian Ethics at Princeton Theological Seminary.
411
Verstraeten, Johan (1998), From Business Ethics to the Vocation of Business Leaders to Humanize
the World of Business, Business Ethics: A European Review, 2, p. 118.
412
Verstraeten, Johan (2000), Business Ethics: Broadening the Perspectives, Louvain: Peeters, p. 5.
183
the anchorages of tradition and religion, which are the ties that ultimately bind
together cultural, political and economic power.
In the third place, moral theology should play a more prominent role in helping
business ethics students to reflect systematically upon spiritual and moral purposes of
business and to get a genuine understanding of human nature and the spirit of
enterprise. In todays world, characterized by the bankruptcy of secular Western
values such as hedonism and materialism, the universal message of the Vatican
should resonate more deeply. Official CST is wellpositioned to make the point that
material goods do not guarantee happiness, nor give meaning to life. Upperclass
individuals witness that greater wealth often translates into great spiritual emptiness
and moral void. CST should spur economists and business leaders to think outside the
box.
More research should address the ways in which official CST is or should be better
integrated into business ethics courses. Moral theology should remain central to the
curriculum of all students including students in the science of economics
reflecting the essential place of official CST in the understanding and formation of
human nature, history and society. Official CST can serve as a moral compass,
guiding students and future managers to better resolve business ethics dilemmas.
Moral theology has to be addressed with a new explicitness. With the failure of
secular idealisms, CST can transform the spiritual life of the world of business. This is
urgent as corporations face unprecedented challenges in our globalized era, which go
from addressing corruption to culture clashes, from pressure to deliver on the bottom
line to loss of morale. A starting point for further research efforts is the recognition
that the insights of the contemporary business ethicists such as Donaldson, Porter and
Martin are mostly compatible and consonant with the moral teachings of the
magisterium. Official CST should therefore ring a bell not only in seminaries,
sacristies and theological faculties but also in parliaments, embassies and corporate
boardrooms as it clearly represents value added.
As the contemporary debate on business and ethics has evolved dramatically with the
advent of economic globalization, Pope Benedict XVI should consider promulgating
an encyclical on social and economic themes. The socalled right to development is a
topic, which deserves urgent attention. A key question is whether Western countries
and multilateral agencies should intervene in chronically misgoverned poor countries,
even it that means infringing national sovereignty? It is worth recalling that effective
intervention ended Sierra Leones civil war, whereas nonintervention doomed
Rwanda to genocide. A similar lesson might apply to the current situation in
Zimbabwe. According to Archbishop Pius Ncube, Britain would be justified to invade
Zimbabwe to remove President Robert Mugabe. This leading Zimbabwean cleric
argues that the deepening destitution in the former British colony, including social
misery and macroeconomic mismanagement, meant Britain would be right to act.
Liberation theologians nonetheless might accuse neoconservatives of bellicose
neocolonialism at the slightest hint of intervention.
The fortieth anniversary of Pope Paul VIs 1967 social encyclical Populorum
Progressio provides an opportunity to address the tensions between the neocon and
liberationists viewpoints. An update on development issues is not only desirable
184
because of the changing dynamics of globalization. It is also interesting from a strict

theological and intraecclesial standpoint: concepts such as liberation and liberty are
so vague that both Gustavo Gutirrez and Michael Novak, who operate at opposite
ends of the theological specter, can claim that they are doing or following CST.
In sum, this study has offered a critical examination of various currents and traditions,
which link theological reflection to economic realities. In order to be respected, moral
theologians should more frequently descend from their ivory towers, bully pulpits and
library cubicles and engage themselves in debates with economists, politicians,
anthropologists, sociologists, marketers and business managers at the public square.
This requires perseverance, vision and transformation. It is worth reminding Pope
John Paul II, who in his apostolic letter Tertio Millennio Adveniente reiterated that it
must be asked how many Christians really know and put into practice the principles of
the churchs social doctrine.413 As much of todays CSR is anticipated by CST, a
first step would be to overcome ignorance of the rich social tradition. Exorcising the
myth of amoral business requires concrete commitment, not passive speculation and
abstract research. Without a rigorous use of the socioanalytic mediation, theological
judgments on economics get lost in fingerwagging and dilute into moralisms. Moral
theologians therefore urgently need to appropriate innovative concepts of strategic
management manuals, such as contextdriven strategic CSR, sustainable
entrepreneurship, fiduciary responsibility, democratic accountability and corporate
citizenship. These heterodox concepts should spur moral theologians to think outside
the box in devising creative yet feasible policies that are capable of transforming
society. In order to overcome pharisaic moralism, which is too much a characteristic
of liberation theology, theologians should urgently accord their nihil obstat to the new
explorations of contemporary economics. This is the only viable way for moral
theologians to being loyal to their prophetic vocation and remaining relevant in
church and society.
Johannes van de Ven, Ph.D.

Rome, Easter 2008
The author is an advisor of the Swiss Consulting Group and is currently based in
Lausanne, Switzerland. He writes here in a personal capacity.414 This occasional paper
is a revised version of his Ph.D. dissertation in moral theology and business ethics,
which was defended at the Catholic University of Louvain, Belgium, on January 25,
2008.415
413
Pope John Paul II (1994), Tertio Millennio Adveniente, Vatican, November 10, 36.
414
I would like to express my deep gratitude to people who have considerably contributed to this paper.
Above all, Johan Verstraeten, whose extensive knowledge of business ethics and moral theology,
combined with his spirituality and commitment at the grassroots level, are exemplary and a source of
inspiration. Special thanks also to Paul De Grauwe and Luc Van Liedekerke, whose astute comments,
ingenuity and critical assessment have been indispensable. All three have provided much needed
academic guidance and invaluably contributed to deepening my understanding of the raised issues.
Much of the content has been lively debated in classes and seminars at the Catholic University of
Louvain, Universit Catholique de LouvainlaNeuve, Rio de Janeiros Pontifcia Universidade
Catlica, New Yorks Columbia University and Manilas Ateneo. My colleague Richard Radu has been
a perceptive reader of the manuscript. All remaining errors and inadequacies are mine.
415
Van de Ven, Johannes (2008), Business Ethics as a Contemporary Challenge to Moral Theology,
Catholic University of Louvain, January 25, 273 pp.
185
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A MoralTheological Critique of Business Ethics

Between Pharisaic Moralism and Prophetic Morality

Johannes van de Ven, Ph.D.

One man pretends to be rich, yet has nothing;

1. The Modern Debate in Historical Perspective .........................................................12

2. Contemporary Ethics Models at Business Schools..................................................23

3. Preliminary Conclusion: Towards a Paradigmatic Shift..........................................40

1. At the Crossroads of Economics and Theology.......................................................43

2. Business Ethics and Moral Theology in Historical Perspective ..............................46

3. The Social Magisterium of the Roman Catholic Church.........................................51

3.3.1. Deus Caritas Est (2005) .............................................................90

4. Business Ethics in Contemporary Contextual Theologies.......................................93

5. Preliminary Conclusion: Evaluating MoralTheological Contributions ...............152

1. The Limited Usefulness of Mainstream Business Ethics Models .........................165

2. Assessing the MoralTheological Contributions to the Debate ............................170

3. Catholic Social Teaching in the Corporate Boardroom.........................................177

4. Challenges for Moral Theologians and Business Ethicists....................................182

Proposing a moraltheological critique of business ethics seems a rather pretentious

The ageold standoff between theologians and economists challenges us to reframe

At the outset, the philosophical foundations of what is regarded as the dominant

It is important to stress that there is no intention to supplant mainstream economics

It is my working hypothesis that moral theology and business ethics should be

In order to avoid conceptual misunderstandings or cultural bias, a few comments on

In general, economics will be understood as a critical study of production, distribution

Business ethics started to surface in the 1970s sparked by a new environmental

PHILOSOPHICAL FOUNDATIONS OF BUSINESS ETHICS

1. The Modern Debate in Historical Perspective

In order to better understand the dynamics of business conduct in the era of

1.1. Adam Smith

According to Smith, an important step toward the achievement of perfect liberty,

Smith argues that a freemarket mechanism legitimizes the pursuit of selfinterest:

be a problem for Christian ethics because of its explicit endorsement of selfinterest.

Unfortunately, Smith is mostly known by the doctrines exposed in the previous

1.2. Friedrich Hayek

For Hayek, socialism is a false secular religion, doomed to fail. Arrogation of

of profit is stimulating individuals to discover new opportunities and untapped

In sum, Hayek restored economics as a field worthy of investigation by moral

1.3. Milton Friedman

and interest rates rather than by a governmental intervention.38 Although mostly

The concept of freedom is crucial to understand Friedmans theories. He asserts that

According to Friedman, individuals should be guided by the concept of selfinterest.

own values.41 Friedman compares business to a game, which goal is to maximize

According to Friedman, businessmen who believe that business has a social

For Friedman, businesspeople should not intentionally seek to promote justice

A growing academic consensus grew that economics should be driven by ahistorical,

The most influential freemarket economist of the twentieth century died in

principles of economics were fully explained in mathematical terminology, such as Newtonian

2. Contemporary Ethics Models at Business Schools

The freemarket doctrine as formulated by Smith, Hayek and Friedman still

2.1. Beyond the Dominant Academic View

stockholder interests and an inadequate basis for policy discussions. As a possible

According to Eric Beinhocker, modern economic behavior should be explained as an

2.2. Thomas Donaldsons Integrative Social Contract

Due to various deficiencies of the stockholder, shareholder and corporate governance

Unlike Hobbes, the SwissFrench philosopher JeanJacques Rousseau (17171778)

According to Donaldson, an implied social contract is based on three principles: A

In sum, Donaldson proposes two levels of social contract: a macrosocial contract

ambitions. Donaldson makes a further distinction in the legal perspective, suggesting

According to Robert Phillips, the hypothetical character of Donaldsons social

2.3. Michael Porters Strategic Corporate Social Responsibility

Michael Porter argues that a corporation can considerably contribute to societys

Conventional philanthropy is characterized by institutions such as the Ford and

to benefit society.96 In order to overcome these weaknesses, Porter proposes a