One of my principal scholarly interests is Catholic social teaching on corporations and the economy. In fact, I am the only person I know who came to Catholicism through economic analysis of corporate governance. A couple of years ago I wrote a series of law review articles about participatory management – i.e., employee involvement in corporate governance. One of the questions in which I got interested was whether employees have a right to participate in corporate decisionmaking, which lead to an inquiry into natural law, which in turn stimulated an interest in faith-based analyses of corporate governance. At the time, I was an evangelical disgruntled with the state of evangelical scholarship (Mark Noll, who I regard as the doyen of evangelical scholars and church historians, wrote a great book on this problem: The Scandal of the Evangelical Mind, which I keep meaning to review). Catholic social teaching struck me as the only well-developed faith-based account around. I relied on it in writing Corporate Decisionmaking and the Moral Rights of Employees: Participatory Management and Natural Law, 43 Villanova Law Review 741 (1998). Reading the papal encyclicals on the economy, especially John Paul II’s Centesimus Annus, and Michael Novak’s books, especially Toward a Theology of the Corporation (which I also keep meaning to review), in doing the research on that project got me interested in Catholicism. (I’m also a longtime reader of the fabulous magazine First Things, which probably lay the groundwork.) One thing lead to another—i.e., RCIA–and my wife and I eventually were received into the Catholic church.
My first post-conversion attempt at merging my interest in Catholic social teaching and corporate governance was The Bishops and the Corporate Stakeholder Debate, 4 Villanova Journal of Law and Investment Management 3 (2002). That essay critiqued Catholic social teaching on corporate social responsibility. Specifically, it focused on one of the policy recommendations made by the U.S. Bishops in their pastoral letter on economic justice, Economic Justice for All: Pastoral Letter on Catholic Social Teaching and the U.S. Economy. In that document, the Bishops addressed the long-running stakeholder debate; i.e., they claimed that decisionmaking by directors of public corporations should take into account the interests of corporate constituencies other than shareholders. My article evaluated three ways in which the Bishops’ position might be translated into public policy: (1) directors could be given nonreviewable discretion to make trade-offs between shareholder and stakeholder interests; (2) directors could be given reviewable discretion to make such trade-offs; or (3) directors could be required to make such trade-offs subject to judicial (or regulatory) oversight. None of these approaches, I argued, is an improvement on current law; to the contrary, all are worse. The first approach would be toothless, the second would increase agency costs, and the third would either prove unworkable or pose an unwarranted threat to economic liberty (or both).
It might seem somewhat churlish to have dissented so soon after switching sides. In my view, however, it is the task of Catholic intellectuals to exercise critical reflective judgment with respect to society, the Church, and the relationship between the two. Of course, I recognize that there is a fine line between the exercise of critical evaluative judgment and illegitimate dissent. With respect to the stuff I write about, however, I don’t think this is a problem. When it comes to issues such as the degree of state intervention in the economy, the Church outlines basic principles but recognizes substantial latitude with respect to their translation into public policy. Nowhere, for example, does the Church state what percentage of the economy should by controlled by the state, which leaves a great deal of room for prudential judgment by the Catholic laity. In promulgating their pastoral letter, moreover, the Bishops expressly acknowledged that their “prudential judgments” about specific policy recommendations were not made “with the same kind of authority that marks our declarations of principle.” (xii.) More to the point, perhaps, in Centesimus Annus (para. 43), the Pope reminded us that the Catholic “church has no models to present.”
Anyway, since one of the main purposes of this blog (besides relentless self-promotion) is writing up ideas that I don’t want to write a 50+ page law review article about, you can expect the occasional posting about Catholic social teaching on corporate governance.