What is the Church’s Teaching on Labor and Profit in Business? – Theosociologically yours, Dr. Vivencio (Ven) Ballano
On May 14, 2018 May 14, 2018 By vballano@yahoo.comIn Business, Capitalism, Catholic Church, Catholic Social Teaching, Christian faith, Labor	
One important teaching of the popes and Church councils in the Catholic Social Teaching (CST) which has been kept secret to many employers and entrepreneurs is the moral principle on the priority of labor over capital and the rights of workers in the workplace. Beyond the state’s view and material concern on labor and rights of workers, the CST considers above all the spiritual significance of labor in the divine plan and dignity of workers as created in the image and likeness of God.
The modern CST as a set of documents has been existing in the Catholic tradition for more than one hundred years from now after Centesimus Annus (1998) commemorated the 100th anniversary of the publication of the first CST document Rerum Novarum (1898). Throughout these years and in almost all documents, the labor issue has always been central in the discussions of these documents. It is one of the recurring themes in the CST that the Pope and the Catholic bishops often discussed the documents in response to the signs of the times. Work is the mark of a person operating within a community of persons (CCC 2427). Work is central in the Church’s social teachings. In relation to social justice, “[h]uman work is a key—probably the essential key—to the whole social question” (CFC 1181). It is the key to the solution … of the whole “social question.” To consider work is of decisive importance when trying to make life “more human.
Prioritizing labor over capital has biblical foundation. In the CST, labor means participation in the divine call to subdue the earth. “Human work proceeds directly from persons created in the image of God and called up to prolong the work of creation by subduing the earth, both with and for one another (CCC, n. 2427). “The earth, by reason of its fruitfulness and its capacity to satisfy human needs, is God’s first gift for the sustenance of human life. But the earth does not yield his fruits without a particular response to God’s gift, that is to say, without work.. It is through work that man [or woman] using his [or her] intelligence and exercising his [or her] freedom, succeeds in dominating the earth and making it a fitting home” (CA, n. 31).
A business firm is not only a conglomeration of individuals with technical functions bonded together with the sole purpose of earning profit but a community of persons in the service of society. Profit in busines should not be the only regulator and purpose of business. “It is possible for the final accounts to be in order, and yet the people—who make up the firm’s most valuable asset—to be humiliated and their dignity offended…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” (CA, n.35).
In short, the social and moral welfare of people within the business firm, especially those of the workers, is equally important like profit in knowing whether the business is doing good in the long run. Workers will be well motivated to work if they are well remunerated and their rights are respected by the company, thereby increasing the productivity and profitability of the company. The Church would even go to the extent of proposing profit-sharing in business in order that each member of a company feels that he or she is stakeholder and part owner and thereby also increasing the firm’s productivity.
Textbooks on business administration, management and entrepreneurship in business courses with their preoccupation with profit always imply that Capital is a priority over Labor. The common practice of some business to sacrifice the wage and benefits of workers to lower production cost and thus attain forecast and higher profit levels indicates this mentality of businessmen to give more importance of capital over labor. One unfair labor practice that shows this priority of the growth of capital rather than labor is the “casualization” of labor.
To lower labor cost to increase profit is the hiring of casuals with work contracts with less than six months to prevent employees to become regular or permanent under the Philippine Labor Code and thus save money by not spending for their social benefits. This practice indicates than businessmen/women are not really more concerned with the welfare of the workers by providing them permanent jobs but with the increase of profit or capital. The hiring of casual employees rather than permanent workers to minize the cost of labor and maximize profit is one example of this prioritization of capital over labor. Is capital really more important than labor in business?
Well, from the point of view of entrepreneurs and managers socialized and trained in business schools on capitalist values and on the art of profit-making, capital is always given higher priority over labor. But this is not so for the Church. In papal encyclical Laborem Exercens (Human labor), Pope John Paul II clarifies the principle of labor over capital: “In view of this situation we must first of all recall a principle that has always been taught by the Church: The principle of the priority of labor over capital. This principle directly concerns the process of production: in this process labor is always a primary efficient cause, while capital, the whole collection of means of production, remains a mere instrument or instrumental cause” (Laborem Exercens, n.52).
On the one hand, labor consists of people or workers whom the Church views as the most important value in the production process. Workers are created in the image and likeness of God, and thus possess human dignity and human rights. Moreover, the work of employees in a business firm is seen by the Church as actualizing of the divine call in the Book of Genesis on subduing the earth. Work in a production is not only a mere exhaustion of physical energy but contains a spiritual meaning. That is why the Catholic Social teaching speaks on the spirituality of work.
Capital, on the other hand, consists of material things. Money, stocks, machinery, equipment, land and all other forms of productive capital are created things. It’s true that capital is crucial in formation and maintenance of business. But it is definitely lower in spiritual values in comparison with labor in terms of spiritual and moral importance for the Church. Therefore, if a Catholic businessman/woman has to choose which one to prioritize between the two in case of conflict, he or she has to opt for labor as people posses human dignity while capital which consists only of material goods.
Furthermore, if the business situation would force to him/her to choose which one to prioritize: High profit or welfare of the workers, a Catholic entrepreneur must let go of his/her higher profit margin or forecast than retrenching workers or reducing or removing their benefits and privileges. Christian or Catholic entrepreneurs are people with a spiritual mission. They build businesses to serve people in society by providing them quality products and services as a manifestation of their love for God and neighbor.
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