CAPITAL is simply money which has been invested to create business. It may be to enlarge an existing business or to start a new one. It may come from profits reinvested or from people's savings, or from the state.
There are two big problems about capital — who should control it and what should it be used for, or rather, how should it be used?
The control of capital is a source of power. For this reason modern politics is greatly concerned with the issue, The Right believe capital should be controlled by those who earn it, The Left believe it should be controlled by the state. We, as Christians, need not be so much concerned by who controls capital as with how it is used. What should be the objectives of investment?
When the world population was much smaller most people lived by the natural produce of the soil and the sea. These provided man's basic needs food, clothing, shelter, and creative work in which his spirit could flourish.
Today man has the same needs but the world population is growing at a rate which is putting impossible pressures on the earth's natural resources, including land and sea. At the same time the consumer society — an invention of the Western world — has focused the expectations and aspirations of the whole world on the possibility of obtaining standards of material prosperity and of consumption never dreamed of before.
In today's world capital is necessary to develop the natural resources through industry and advanced agriculture, and at the same time to provide work for people. Most people today spend most of their lives either working for money, or spending it, or investing it, or just worrying about not having enough of it. Yet the Church's teaching is pathetically inadequate when it comes to solving the real everyday problems of how to live out, in practical terms, a Christ-like life in a materialistic pluralist society.
The time is long overdue for a reconsideration in depth of the Christian morality of money, and of its use and investment in our society.
We have seen in an earlier article that man has the Godgiven right to use the earth's resources for his needs. He also has the duty not to abuse them. He has a responsibility of stewardship towards all created things.
Those in positions of responsibility — including those who control the deployment of capital and those who manage the businesses in which it is deployed — must surely have a moral obligation to ensure that capital is properly used. The same obligation must evolve in a lesser degree on each individual who has a surplus to invest.
It must, therefore, be a moral issue of the utmost importance to decide the criteria by which proper use of capital should be judged. Bruce Kent, in an earlier article in this series, seems obsessed by investment in South Africa.
This is a special case where the responsible use of investment might influence a political regime which most of us deplore. But the question is much larger than this. The Church needs to evolve a theology of investment, a morality of investment, which could give a lead to the world in the use of capital for the common good.
Pending some more authoritative voice on the subject, I would like to look at some of the possible criteria which might be used to judge the quality of an investment or of a business.
One of the most important functions of investment is to provide people with work places. It is evident that these work places must be viable. If they are not the business will fail and the work places will disappear, or, if it is a public sector business, non-viable work places will be subsidised by the rest of the community, and this is unjust.
A business must also pay fair wages. There is a substantial area for argument about what constitutes a fair wage. A business which brings jobs to those who had no jobs before may be justified in paying low wages if it can survive only by doing so. But a business which can remain viable only by paying wages too low to provide the reasonable necessities of life is probably not a sound use of capital in the first place.
The quantity and quality of jobs provided by a business ought to be appropriate to the society in which it is located. It is not a good investment to build a high technology plant, having minimal labour requirements, in an area where unemployment is rife.
Equally, it would be wrong to employ labour in such a way that the wages their output can justify are too small to provide a fair wage. The quality of work provided is also of the utmost importance. Work ought not to be dehumanising or degrading. Dehumanising work, even if it is well paid, is worth infinitely less than work which enables a man to live out in some measure his inherent God-given creativity.
It seems to me that it must also be important to look at the product or service which a business provides. One which is producing essentials, such as food, clothing or shelter, must surely be more easy to justify than one which produces only luxuries or, still worse, products damaging to humanity.
Many Christians understandably feel strongly about investment in companies producing armaments. Others are more concerned about those producing and promoting the consumption of alcohol or tobacco.
Priorities differ, but I believe that no investor can avoid his responsibility to make his own best judgment in the light of conscience about the kind of business in which he invests.
There are many other questions which can be asked — for example, is a business causing pollution or degradation to the environment? Is it using up, for the benefit of a few, a disproportionate share of the world's resources?
Human relationships within a business, and with those outside, are another area in which an investor should be concerned. Every business involves a complex of relationships among the owners, managers, directors, workers, shop stewards, and the unions and different groups of workers within it.
Outside, the business
relationships exist with other groups such as financiers, bankers, .suppliers and neighbours.
The inter-relationship between each of these groups and the others may be complex.
Each group ought to consider and respect the others as
members of a team, as limbs of a body, each necessary to the other and morally obliged to pull their weight and to treat one another with fairness.
One very special relationship is that of a business with its customers. The product (or service) offered by a responsible business ought to be sound and suitable for the purposes it claims to fulfil.
Advertising should be honest and calculated to inform rather than to play on fear, greed, or the baser emotions. Service, when promised, should be provided. Changes in model ought to be genuinely for the benefit of the customer.
The morality of planned obsolescence in a world where resources are limiting can be strongly questioned. It should be characteristic of an ethically
responsible business that it accepts fully its obligations to all the other groups with whom it is involved, and to the public at large.
What, you will ask, about profit? Profit is essential to the proper functioning of business enterprises in a free society. It has two roles.
First, profit is important as a yardstick against which in vestors and managers can measure the efficiency of the business. This function is difficult to replace — witness the nationalised industries.
Secondly, profit is a way of mobilising new capital.
Sometimes new capital comes from profits ploughed back into the same business. At other times it is attracted from outside investors by the hope of profit. Capital is necessary in the world today.
There are, of course, other ways of mobilising capital. In state-controlled and centralis ed economies it is mobilised by taxation and confiscation.
These centralised statecontrolled economies have not so far proved efficient in the way they use capital, and the system involves serious loss of individual liberty.
We must recognise, however, that the profit motive, which is essential to the success of the private enterprise system, has serious potential dangers. The gravest is that the maximisation of profit should be seen as the sole objective of those who control the use of capital.
It has been pointed out by Brendan Soane in an earlier article that "most managers and company directors are human beings.' Many of them— many of us — are concerned that we do what is right. We lack any authoritative guidance from the Church to support us in taking a stand.
I, therefore, conclude with an appeal that the Churches should call together a commission of the Good and the Great (both cleric and lay) to develop a coherent practical philosophy about Christianity and capital.