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Building Moral Capital

6/28/2004 - 7:00 AM PST

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Virtue's Role in Today's Business World

NEW YORK, JUNE 28, 2004 (Zenit) - With ethics scandals still fresh in many countries, a couple of recent books examine what role morality can play in avoiding such problems. What the business world should do, says Alejo Josť G. Sison, professor of business ethics at the University of Navarra, Spain, is to give a higher priority to moral factors.

In his 2003 book, "The Moral Capital of Leaders: Why Virtue Matters," Sison observes that in the Enron scandals, for example, "no amount of human, intellectual or social capital could make up for the lack of moral capital among workers for the long-term success of the enterprise."

Sison defines moral capital "as excellence of character, or the possession and practice of a host of virtues appropriate for a human being within a particular sociocultural context." Or, in a word -- integrity. Unlike other skills that a person can develop and that perfect someone in a particular capacity, moral capital perfects the human being as a whole person. "Moral capital is what makes a person good as a human being," Sison writes.

As to what moral capital consists in, Sison bases himself on Aristotle, and in particular, on the development of virtue laid out in the Nicomachean Ethics. It is common these days to talk about values, he observes, but moral capital is more than a superficial commitment to values. "Rather, as excellence of character, moral capital depends primarily on cultivating the right habits or virtues."

In practice, this moral capital is built up by means of our actions, which then develop into permanent habits. The habits, in turn, configure our character and our life. In business terms, good actions give us a return similar to what we earn in the simple interest accrued to money deposited in a bank. Habits are a payoff similar to compound interest, in which we receive a return not only on the sum deposited, but also on the accumulated interest payments made in the past.

Sison explains that virtue can benefit a firm by means of the positive influence virtuous workers exert on corporate culture. Virtuous workers not only diminish the legal and financial liabilities that stem from corporate wrongdoing. They also tend to work better, thus contributing more to a company.

In fact, we need to pay more attention to the human factor in examining economic production, argues Sison. "Without the work of people, neither the most cutting-edge technology nor any amount of accumulated wealth or property will ever produce a significant improvement in human welfare."

The book concludes with some ideas on how firms can promote the formation of moral capital among its workers.

-- Fostering the right actions by practicing the virtue of justice, understood as adherence to the law.

-- Investing in proper personal habits and corporate procedures by practicing the virtue of moderation in controlling the desire for immediate gratification.

-- Fostering an upright character and corporate culture by practicing the virtue of courage. This sustains long-term worthwhile projects despite difficulties.

-- Cultivating the proper lifestyle and corporate history by practicing the virtue of prudence, which disposes one to do what is good here and now, without losing view of the end goal.

Compatible with Christianity?

Morality and the business world was also examined in "Is the Market Moral?" The 2004 book comprises a series of dialogues between Rebecca Blank, professor of economics at the University of Michigan and a member of the Council of Economic Advisers during the first Bush administration and also under President Bill Clinton, and William McGurn, chief editorial writer for the Wall Street Journal.

Blank comes from a Protestant background and is a member of the United Church of Christ. She describes herself as a "card-carrying mainstream economist." McGurn is a Catholic and an ardent defender of the free market.

Both of them agree on the advantages of market capitalism as an economic system, but differ on how best to ensure a market that adheres to moral principles. Blank asks: "If we accept an economic model that assumes that appropriate choices are made when individuals are self-interested, individualistic, and focused on the acquisition of more things, is doing so a validation of our worst natures and a turning away from Christian attributes?"

Blank explains that Christianity offers some elements that are in contrast to the market model of behavior: the value of community and of others; a more-moderate emphasis on the accumulation of material goods; an appreciation for the moral differences of various choices; and a concern for the poor.

Balancing market demands and Christian beliefs in the workplace often places ...

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