Social Enterprise

We now present a selection of texts taken from the Social Encyclical of Pope Benedict XVI, Caritas in Veritate, focused on the need to promoting a new type of company that could be called "social enterprise". They express in a very appropriate manner "the Tankay philosophy."

"What is needed, therefore, is a market that permits the free operation, in conditions of equal opportunity, of enterprises in pursuit of different institutional ends. Alongside profit-oriented private enterprise and the various types of public enterprise, there must be room for commercial entities based on mutualist principles and pursuing social ends to take root and express themselves. It is from their reciprocal encounter in the marketplace that one may expect hybrid forms of commercial behaviour to emerge, and hence an attentiveness to ways of civilizing the economy" (CiV #37).

"Today's international economic scene, marked by grave deviations and failures, requires a profoundly new way of understanding business enterprise. Old models are disappearing, but promising new ones are taking shape on the horizon. Without doubt, one of the greatest risks for businesses is that they are almost exclusively answerable to their investors, thereby limiting their social value...  Yet there is also increasing awareness of the need for greater social responsibility on the part of business... There is ... a growing conviction that business management cannot concern itself only with the interests of the proprietors, but must also assume responsibility for all the other stakeholders who contribute to the life of the business: the workers, the clients, the suppliers of various elements of production, the community of reference... John Paul II taught that investment always has moral, as well as economic significance" (CiV #40).

"The continuing hegemony of the binary model of market-plus-State has accustomed us to think only in terms of the private business leader of a capitalistic bent on the one hand, and the State director on the other there exist various types of business enterprise, over and above the simple distinction between “private” and “public”... (but) . Each of them requires and expresses a specific business capacity. In order to construct an economy that will soon be in a position to serve the national and global common good, it is appropriate to take account of this broader significance of business activity. It favours cross-fertilization between different types of business activity, with shifting of competences from the “non-profit” world to the “profit” world and vice versa, from the public world to that of civil society, from advanced economies to developing countries" (CiV #41).

"The economy needs ethics in order to function correctly — not any ethics whatsoever, but an ethics which is people-centred. Today we hear much talk of ethics in the world of economy, finance and business. Research centres and seminars in business ethics are on the rise... It would be advisable, however, to develop a sound criterion of discernment, since the adjective “ethical” can be abused. When the word is used generically, it can lend itself to any number of interpretations, even to the point where it includes decisions and choices contrary to justice and authentic human welfare" (CiV #45).

"When we consider the issues involved in the relationship between business and ethics, as well as the evolution currently taking place in methods of production, it would appear that the traditionally valid distinction between profit-based companies and non-profit organizations can no longer do full justice to reality, or offer practical direction for the future. In recent decades a broad intermediate area has emerged between the two types of enterprise. It is made up of traditional companies which nonetheless subscribe to social aid agreements in support of underdeveloped countries, charitable foundations associated with individual companies, groups of companies oriented towards social welfare, and the diversified world of the so-called “civil economy” and the “economy of communion”. This is not merely a matter of a “third sector”, but of a broad new composite reality embracing the private and public spheres, one which does not exclude profit, but instead considers it a means for achieving human and social ends... It is to be hoped that these new kinds of enterprise will succeed in finding a suitable juridical and fiscal structure in every country. Without prejudice to the importance and the economic and social benefits of the more traditional forms of business, they steer the system towards a clearer and more complete assumption of duties on the part of economic subjects. And not only that. The very plurality of institutional forms of business gives rise to a market which is not only more civilized but also more competitive" (CiV #46).

"The strengthening of different types of businesses, especially those capable of viewing profit as a means for achieving the goal of a more humane market and society, must also be pursued in those countries that are excluded or marginalized from the influential circles of the global economy... The principal concern must be to improve the actual living conditions of the people in a given region, thus enabling them to carry out those duties which their poverty does not presently allow them to fulfil. Social concern must never be an abstract attitude... International cooperation requires people who can be part of the process of economic and human development through the solidarity of their presence, supervision, training and respect.  From this standpoint, international organizations might question the actual effectiveness of their bureaucratic and administrative machinery, which is often excessively costly" (CiV #47).

"It should also be remembered that, in the economic sphere, the principal form of assistance needed by developing countries is that of allowing and encouraging the gradual penetration of their products into international markets, thus making it possible for these countries to participate fully in international economic life. Too often in the past, aid has served to create only fringe markets for the products of these donor countries. This was often due to a lack of genuine demand for the products in question: it is therefore necessary to help such countries improve their products and adapt them more effectively to existing demand. Furthermore, there are those who fear the effects of competition through the importation of products — normally agricultural products — from economically poor countries. Nevertheless, it should be remembered that for such countries, the possibility of marketing their products is very often what guarantees their survival in both the short and long term. Just and equitable international trade in agricultural goods can be beneficial to everyone, both to suppliers and to customers. For this reason, not only is commercial orientation needed for production of this kind, but also the establishment of international trade regulations to support it and stronger financing for development in order to increase the productivity of these economies" (CiV #58).

"It is good for people to realize that purchasing is always a moral — and not simply economic — act. Hence the consumer has a specific social responsibility, which goes hand-in- hand with the social responsibility of the enterprise. Consumers should be continually educated regarding their daily role, which can be exercised with respect for moral principles without diminishing the intrinsic economic rationality of the act of purchasing... In addition, it can be helpful to promote new ways of marketing products from deprived areas of the world, so as to guarantee their producers a decent return. However, certain conditions need to be met: the market should be genuinely transparent; the producers, as well as increasing their profit margins, should also receive improved formation in professional skills and technology" (CiV #66).