by MA. Socorro P. Calara
published on Manilatimes.net Monday, October 10, 2011
The International Conference on Social Protection and Poverty Alleviation held at the University of Santo Tomas last September 23 to 24, 2011, featured the different phases of poverty. It provided innovative ways to help alleviate or mitigate poverty. Dr. Luigino Bruni, the major theorist of the Economy of Communion (EoC), an economist from the University of Milan—Bicocca, Italy, presented a new paradigm, involving a culture of giving and reciprocity, to alleviate the conditions of the poor. It involves the business enterprise as centers of profit and at the same time communities oriented towards authentic relationships within the economic domain.
The principle of the EoC was started by Chiara Lubich, the founder of the Focolare Movement. While visiting Sao Paolo, Brazil in 1991, Chiara noticed the stark contrast between the favelas (slums) surrounding the high rise buildings in the city.
This sight motivated her to start the concept of the EoC where a business person operates a business enterprise to make profits and to benefit society. The mission of EoC is to combat poverty by entering into an agreement on the division and redistribution of profits. It is built on the premise that if profits are shared in reciprocity with the poor, general happiness increases. With the EoC, business becomes a place of communion and fraternity. In EoC, the entrepreneur voluntarily commits to divide the profit into 3 parts. First part goes to finance the development of the business itself; the second, to spread the culture of communion, the formation of “new men and women” who are committed to the culture of giving based on reciprocity; the third, to help people in need with projects, by beginning with those who are in contact with the Focolare communities, according to the principle of subsidiarity.
“When a family is helped with the profit of the EoC, the process will not be accomplished with the act of receiving the money; not when the money is spent. It will be accomplished only when the help received puts the family in a condition of leaving the situation of deprivation and re-establishing a full relationship in reciprocity and equality.” (The Economy of Communion Theory and Practice).
The characteristics of EoC entrepreneurs are: they live the ‘culture of giving’; they give primacy to Man so as to establish healthy relationships; they are law-abiding and practice ethical behavior; they are concerned with preserving the environment; they are concerned with the health of their employees and the impact of products produced by the enterprise on the community; they believe in developing people to their fullest potential and they keep lines of communication open for the people. Entrepreneurs in the EoC are committed to operate their businesses efficiently and profitable.
The EoC is a new paradigm that allows entrepreneurs and businesspersons to reconcile their faith with their economic activity. In this age of materialism, where self-interest propels economic decisions in the marketplace, most Christians are swayed to make easy compromises with the “standard operating procedures” of business. The business ethics principles learned in college, where the social teachings of the church (e.g. Centesimus Annus) are explained, are easily set aside. This is a temptation among nascent entrepreneurs because of the desire to prove themselves by making profit. The desire to make profit is institutionalized in the minds of students through the very popular economic theories like Theory of the Firm which states that the bottomline of every firm is profit. Profit becomes the foundation of the capitalist system (market economy) because as they say, without profit, nobody will continue to invest in any economic activity. When a businessperson becomes part of EoC, he learns to curve this selfishness and narrow self-interest by assuming a broader perspective of things like working for the common good rather than personal interest.
The Church and classical humanistic tradition have always stressed that commercial activity is essential to the common good and the EoC is totally in line with this thesis, both in theory and in practice. Social teachings insist that commercial activity should be directed to the common good and not merely to property holders’ private profit. “The attainment of a good and prosperous life on the part of great number of people—and at least in theory, by all—would be unimaginable were it not for business leaders who create jobs, wealth, and new products, as well as innovations which constantly expand human opportunities and freedom.” (Centesimus Annus and Caritas in Veritate).
The EoC and the social teachings of the Church are one in reminding businesses especially in these days of crisis, that the business leader is essentially an innovator and a project builder. He is not merely a “speculator” whose main motive is to maximize profit. The exclusive pursuit of profit proves inadequate as the economy and society nowadays have to deal with new challenges, including the environment, “common good,” and globalization (Bruni, 2011). The Austrian economist, Joseph A. Schumpeter, explains the virtuous dynamic of the market as a race between innovators and imitators. He explained the nature and role of innovation by starting with a “stationary state,” the situation in which businesses only carry out routine activities and the economic system perfectly replicates itself over time, without there being creation of true wealth. An entrepreneur breaks away from the “steady state” by introducing an innovation, which can be a technical invention, a new market, or creation of new products, which on average reduces costs and makes it possible for business to create new wealth. The entrepreneur-innovator creates real added value and makes the social system dynamic. The innovator is then followed by a “swarm” of imitators attracted by that created added value. When imitators enter the market, they cause the market price of the given product to decrease, to the point that all the profit generated by the innovation is absorbed. The economy returns to the steady state until a new innovation restarts the cycle of economic development.
The mechanism that awards innovation places the emphasis on people, not so much on capital, finance or technology. Innovation is a matter of vision, of different “eyes” on things and on the world, and therefore a matter of people that see reality differently. The only key to innovation and every economic value is people’s intelligence. This is explicitly explained by Italian economist of the 19th century, Carlo Cattaneo. “There is no job or capital that does not begin with an act of intelligence. Before every job, before all capital . . . it’s the intelligence that begins the work and stamps the character of wealth into it.”
The EoC places people in the center of business. Innovation propels businesses to create goods with value. Innovators are rewarded with profit, which is shared with the others. The relationship with people is nurtured and nourished through the culture of giving and reciprocity. When profit is shared, then general happiness increases.
Ma. Socorro P. Calara, Ph. D. is currently the Dean of the College of Commerce and Business Administration, University of Santo Tomas.