Contemporary Issue: Role of Profit in Business
Pope Saint John Paul II declared that profit is an essential aspect of business affairs because it can be implemented as a bellweather, in order to determine not only the overall health of the business itself, but also to ensure that the basic needs and human dignity of all people who make up the organization are being met.
"The Church 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. But profitability is not the only indicator of a firm's condition. It is possible for the financial accounts to be in order, and yet for the people — who make up the firm's most valuable asset — to be humiliated and their dignity offended." (CA, 35)
Notwithstanding, Our Holy Father vehemently indicated that profit is in no way the sole purpose of business; nor does profit trump the necessity for all businesses, at their essence, to serve humanity and society as a whole. Saint John Paul II was careful to reiterate this teaching several times in Centesimus Annus:
"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, 35)
"In fact, 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 endeavouring to satisfy their basic needs, and who form a particular group at the service of the whole of society." (CA, 35)
This was not a novel concept on the part of Saint John Paul II; this conclusion had been set forth several times on the part of his predesessors. Consider Pope Paul VI's unambiguous pronouncement in Pomplorum Progresso, and interestingly, how he described the idea of a free market gone awry as "unbridled liberalism":
"However, certain concepts have somehow... insinuated themselves into the fabric of human society. 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 nor concomitant social obligations. This unbridled liberalism paves the way for a particular type of tyranny, rightly condemned by Our predecessor Pius XI, for it results in the "international imperialism of money." Such improper manipulations of economic forces can never be condemned enough; let it be said once again that economics is supposed to be in the service of man. " (PP, 26)
Related Thoughts on Role of Profit in Business
Over 120 years ago, Pope Leo XIII introduced the idea of a “just” wage in his encyclical, Rerum Novarum. He defined the just wage as an amount needed to support a thrifty and upright worker plus his family, and prescribed that it must be sufficient enough to allow the worker to save and acquire property of his own. Taken from "Is Your Company Paying “Just” Wages?"
"Do not expect peace in society without seeking the common good.""More than a tinge of urgency can be detected...in Pope Francis' comments on business and economics in his Exhortation, 'Evangelii Gaudium.'" Taken from "Francis - an economic reformer and provocateur"
Marketers invest a good deal of research in setting the right price on new products....But the Catholic Church has a different idea about pricing. Blessed John Paul II, in his encyclical Centesimus Annus, advocates the setting of a “just” price, that is, the price that would be achieved after mutual free bargaining. Selling at above a just price and forcing a sale at below a just price are both morally unacceptable. Taken from "“Just Pricing” and the Apple iPhone"
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