Business Requires Truth

“Freedom,” writes Pope John Paul II in his 1991 encyclical Centesimus Annus, “attains its full development only by accepting the truth. In a world without truth, freedom loses its foundation and man is exposed to the violence of passion and to manipulation, both open and hidden.”



Democratic capitalism as a system is not, and cannot be, ordered to truth as its highest goal, for its moral-cultural system is pluralistic. As Michael Novak points out in The Spirit of Democratic Capitalism, “The system is designed to frustrate the totalistic impulse.” Rather, it aims to create an open moral space in which the individual may seek truth according to his or her own lights and evangelize society “only indirectly, by inspiring millions of individuals and through the competition of ideas and symbols in a pluralistic marketplace.”

Nevertheless, the individual person axiomatically seeks “truth, beauty, virtue and meaning.” And so development of the “[personal] core of common indispensable morality…[and] reasonable degree of goodness, decency, and compassion” upon which democratic capitalism rests, depends in turn on each person’s individual pursuit of truth and conformance of his or her action to that truth, as discerned by the practical judgment of conscience. John Paul II writes in the encyclical letter, Veritatis Splendor — the Church’s reflection on the morality of human acts — that “in the practical judgment of conscience, which imposes on the person the obligation to perform a given act, the link between freedom and truth is made manifest.”

Businessmen and -women, no less than others and perhaps more so than most, are expected to be moral, to seek and do truth in their undertaking of enterprise. This is especially so where their actions are magnified in, and by, large organizations with far-reaching consequences for others and society. It is not matter of imaginary corporate social responsibilities. Rather, it is a matter of real personal responsibilities to form one’s conscience in order that one may do good, and avoid evil.

Practitioners of business are called upon to exercise interior control, or ethics, in their professional activity, at peril of society’s imposition of exterior control, or law, should ethics falter or fail. The scourge of Sarbanes-Oxley, prosecuted with the vigor of Elliot Spitzer, is the price business pays for failing to recognize, in the action of some — too many — of its practitioners, that “the rational ordering of the human act to the good in its truth and the voluntary pursuit of that good, known by reason, constitute morality.”

The foregoing may seem ethereally high-sounding and excessively aspirational to one merely trying to make ends meet by running a business, or working in one. Nevertheless, what I have just said is more description than prescription. I submit that business activity “is,” and is ultimately labeled, as ethical or unethical in consequence of its conformance or non-conformance to truth. Moreover, that conformance is dispositive of who and what one will become, personally and professionally, through activity.

Now, I am keenly aware of the skepticism that greets the mere mention of truth, and the philosophical controversies surrounding its very notion. Yet, no small part of what makes business ethics an edifying field in which to work (as opposed to meta-ethics or moral philosophy) is that nobody feigns to be perplexed by Pilate’s question, “What is truth?” or equivocates about the meaning of “is” when apprised that somebody is “cooking the books.” Rather, the public is quick to judge rightness and wrongness, and act through its agents to euthanize the perpetrators for not knowing the difference between them, as we learned in the tragic case of Arthur Andersen.

The investing public reasonably expects financial statements to depict the actual financial health of a corporation’s ongoing business operations (as closely as possible given structural limitations, such as changing prices for inventory, commodities, et al.), and not the cleverness or trickery of its CFO. Too many times in the recent past, the public has called for integrity and been answered with fraud, actionable fraud.

The healthy functioning of the democratic capitalist system depends on the activity of businessmen and -women who have rightly formed consciences and who act in accordance with the truth. Our socioeconomic system provides space for freedom and it demands that this freedom be used responsibly, that is, in accordance with what it is.

Maximilian B. Torres is a Visiting Associate Professor of Law at Ave Maria School of Law in Ann Arbor, Mich.

(This article was excerpted from the website of the Acton Institute — www.acton.org, 161 Ottawa NW, Suite 301, Grand Rapids, MI 49503 — and is reprinted with permission.)

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