Virtue Capitalism: The Current Problem of Profit Motive or, Using Vice to Make Money


VIRTUE CAPITALISM

The Current Problem of Profit Motive | The Problem of Socialism | The Problem of Capitalism | The Good Life or, The Chief End of Man | Business as a Tool | Virtue Capitalism or, An Economy of the Kingdom

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DSC02087As American corporations continue to get bigger and bigger and obtain more power, there is a recalcitrant truth that continues to plague these companies. That truth is that businesses motivated solely by profit tend to fail in one way or another. Paul wasn’t lying in 1 Timothy 6:10 when he stated that the love of money is the root of all evil; when a company enacts policies solely for profit gain they are betraying a love for money that ultimately makes the company’s practices evil.

Now, do not think I am condemning an attempt to earn a profit. After all, everyone is in it for the profit somewhere along the way. No one would work just to get by or to just pay the bills – ideally everyone wants enough money to take care of the necessities of life and then have some left over for liesure spending and/or savings. Companies should be no different, they should seek to make a profit because that profit can help advance the local economy. Profit in and of itself is not a bad thing, but seeking profit with no ethical parameters is dangerous.

The Myth of Profit as Success

Look at some of America’s biggest companies. Consider Wal-Mart, who treats their employees in an unethical manner while also engaging in a quasi-slave trade. While some may try to say that they are a success story, the reality is that their profit fabricated via the US subsidies that are pumped into the company. If those subsidies were removed then their profit margin would be no where near what it is today. And even with these subsidies the company has struggled to increase their sales and profit, even in an economy that is supposedly turning around.

We can also look to the US banks. While it appears the banks are in a good position, if we removed our subsidies from the banks then only Wells Fargo and Goldman Sachs would be making a profit. The other banks, sans taxpayer money, would be in deep trouble. One reason for this is that unethical business practices, meant to increase bonuses and profit, have soured people’s experiences with the banks. Bank of America, for instance, is now accused of purposefully forcing people into foreclosures in order to make a buck.

I can point to other examples of big companies that treat their employees and/or customers terribly that show a profit, but only display a profit because they are being subsidized. Without those subsidies these companies would die. The myth of profit being equivalent to success has been busted, but an unwitting business world has failed to take notice. The myth of profit is akin to geocentrism; just as people ignored the facts that the earth rotated around the sun, so too is the business world ignoring the facts that profit rotates around people and not the other way around.

Consider how banks and other corporations reward their salespeople. If Johnny sells x number of units, he earns a certain incentive. Thus, his entire incentive is based on how much he can tell of a product. This creates a necessarily unethical environment. While we may want to preach the ideal of Johnny selling everything ethically and beating out Peter who takes the unethical route, the reality is that the person who walks closest to the ethical line (or crosses over it without getting caught) will be able to boost his sales numbers. But one can hardly blame the salesperson for engaging in unethical practices to boost his numbers; after all, if he doesn’t do so then he could lose his job.

This numbers driven model is the model for all publicly traded companies in America. At the end of the day they are concerned with what they can immediately earn rather than longterm ramifications of business practices. Think back to the example of Bank of America and how they (allegedly) forced people into foreclosures in order to boost sales, incentives, and profit. While the unethical actions provided a brief return on money, the longterm ramifications are that the bank will most likely lose money in lawsuits and people abandoning the bank out of disgust for how they acted.

Such actions are not limited to single companies, but can impact entire economies. Look at the subprime mortgages that were the major cause of the 2007-2009 financial crisis. Companies engaged in risky investments and unethical lending practices in order to boost their stock and profit. When everyone was making money no one paid attention to the obvious fact that such practices could not last forever. This economic collapse was so grand that it put millions out of a job. Today in the United States we’re still sitting around 7.6% unemployment compared to a 4.5% unemployment rate in 2007 (in 2009 at the climax of the crisis we hit 10%). Our economic crisis was felt around the world, causing Europe to plunge into a depression, from which they have yet to recover. One in four Spaniards and Greeks are unemployed (compare that to half of their young people being unemployed). France and Italy are hovering around 20% as well. These numbers are encroaching on figures from the height of the Great Depression in Europe, a Depression that led to the election of tyrants. What’s sad is that Europe really has no plan to fix the problem.

The Root of the Issue

In classical philosophy there were seven main vices (popularly known as the Seven Deadly Sins). These vices have sadly been turned into the basis for our modern economy. Most major corporations function solely on the vices because they are led by men who lack an understanding of ethics.

We do what is right because it is right and avoid what is wrong because it is wrong, but that doesn’t negate the fact that doing what is right and wrong comes with consequences. If we do the right thing, more often than not we will achieve a good result that benefits us. This is not always the case (for instance, the man of virtue in a society of vice can suffer major consequences for doing the right thing), but doing the right thing can sometimes come with good results. Just like breathing comes with the result of living, so too does acting virtuously come with the result of creating the good life. Alternatively, just as smoking comes with the inevitable consequence of disease, so too does vice come with the inevitable squandering of life.

There is an absolute right and an absolute wrong (a point I will get to later in this series) and when we act against what is right there will be negative consequences. Look at our corporate world and how though we avoided an economic depression, we still feel like we are on the verge of one. In fact, many economists argue that our economy is so fragile that almost anything could knock it off course. Some will point to certain economic models and practices that have led to this – and certainly these practices matter – but I would argue that the issue here goes beyond economic theories. The root of every socio-economic decision is ultimately an ethical decision. Thus, if one is ignorant of ethics then one is “flying blind” when it comes to politics, the economy, or basic relationships. For instance, if one holds that there is no absolute right or wrong, but that everything is based on feelings, or desire for pleasure, or evolutionary reactions, then one’s policies will reflect this underlying belief.

Since the 1910s America has been a mixture of scientism (not to be confused with the practice of science, scientism is the belief that the scientific method and scientific advancements are the authoritative end-all to knowledge) and hedonism. The Roaring Twenties and the eugenics during that age underscore that this development has been a part of our cultural DNA for around one hundred years. Businesses acted as they pleased and the people believed that science would bring about a new Utopia and would cure all our ills. Many scientists of the day even supported a eugenic movement of breeding out the undesirables as a way to enhance our evolutionary track to beget this Utopia. The Great Depression of the 30s ruined the hedonistic mood of America and the reality of eugenics and science sans morality was discovered in Hitler’s Germany. The generation that witnessed all of this abandoned their hedonistic pursuits and their scientism.

The generation after the Greatest Generation, however, picked up where the previous one left off. Thus, since the 1960s we’ve been teaching our youth that there is no absolute right or wrong, to do what makes them happy as long as it doesn’t hurt someone else. Of course, the “hurt” is relative and often ignored because people can’t lead a life of selfishness and suddenly be altruistic when in contact with the Other. Thus, when we teach people to do what makes them feel happy, even when that happiness can sometimes hurt someone else, they’re still going to act in a way that pleases them. Is it any surprise then that our major corporations tend to put their profit ahead of how they treat people?

The Adoption of Vice

A selfish people will inevitably become a people of vice. They will adopt ideas that have natural consequences, but ignore those consequences and press on ahead. To use a crude analogy, to continue to use vice thinking it will make you feel fulfilled is like having sex with multiple prostitues thinking it will make you pure. In the end, you may have a good time, but you’ll end up diseased-ridden and on death’s door. Using vice may make a person millions, but it is an unfulfilled life and simply not sustainable. Jim may be rich through unethical business practices, but his children may lose the money when people cry to the government because they are victims of what Jim did (or Jim may end up in jail). And even so, as humans we are created to lead lives of virtue, so when we fail to do so we are naturally unfulfilled. Not that being rich is wrong, but riches gained by unethical means are worthless; a rich man might own an expensive mirror, but no amount of money can prevent him from having to look at himself.

In adopting vice as a business model we have essentially ruined our economy. No economic policies will be able to help it recover until we move back to a more ethical footing. While recessions are inevitable regardless of moral stances, our moral stances will dictate how we handle and ultimately recover from those recessions. Consider the following vices and how they have been adopted into the modern business model:

  • Luxuria/Lust: While lust has mostly sexual connotations in English, in Latin it can also refer to simply an intense desire. Thus, an intense desire for fame, glory, pride, money, or sex would all qualify as lust. In the modern business world the most successful are expected to have an intense desire for pride and money. It is no wonder, then, that sexual immorality is incredibly high among our nation’s rich. They are taught to lead a life without limits and to give into their desires. A desire for money and glory is actually positive within our economic culture. But look at where it has landed us. A desire for obtaining wealth has overridden any ethical obligations, which as mentioned above has led to companies to lose profit and for economies to collapse.
  • Gluttire/Gluttony: Gluttony is in reference to the overconsumption of anything, an overconsumption that leads to waste. Many of America’s most successful industries have displayed a gluttonous attitude towards the environment, they have over consumed and even abused our resources. They turn out a profit in how they treat the environment, but it creates a planet that is not sustainable and in the end kills the poorest among us (via prolonged droughts, excessive flooding, poisoned topsoil, etc.).
  • Avaritia/Greed: Gordon Gekko from the movie Wall Street summed up the modern corporate mentality when he said, “Greed is good.” His argument, and the argument of millions of Ayn Rand adherents and misguided conservatives and libertarians, is that greed is what drives profit, which drives an economy. But they fail to notice the difference between greed and desire for a good life. The desire for a good life will still lead one to acquire profit and want to make profit, after all, one needs to eat in order to have a good life. Greed, however, is the desire to acquire material possessions, specifically money, at any and all costs. Greed is what allows a CEO to make millions upon millions of dollars while the workers in his company have to rely on food stamps because of their low income. Greed is defined as attempting to horde or obtain more wealth by trickery of people or the government. This vice is actually a necessity for anyone who wants to make it in today’s corporate world; any CEO that would give up his millions so his workers could be fairly compensated or wouldn’t try to hide some of the more unethical/possibly illegal corporate dealings is a CEO who wouldn’t last.
  • Socordia/Sloth: On its face, it would seem that corporate America is antithetical to slothfulness. After all, the most successful businesspeople tend to work 11-14 hours a day. But traditionally, physical laziness was only a part of what socordia meant. The other part was spiritual laziness, and the modern corporate world is the thick oil to God’s water. While one can be a Christian in our corporate environment, one cannot act like a Christian. While one can worship on Sunday, he better not bring his religion into the workplace Monday through Friday. One has a better chance of discovering Jesus Christ at an “Atheist’s for Philanthropy” meeting than at a modern corporation’s business meeting full of people who attend church every Sunday. Our business world is completely lazy when it comes to knowing and following God, they are slothful in such actions.
  • Ira/Wrath: While corporations tend to avoid acting wrathful toward each other (specifically the bigger corporations as they benefit from each other’s existence), within the corporate world it is a whole other story. As one moves up the corporate ladder, one forms many enemies. It is sad, but anyone who is elected CEO of a major corporation typically crushed many people along the way. Those who are high up in most corporations got there not necessarily because of their amazing qualifications, but because they destroyed any and all who got in their way. But this system rewards the craftiest among those in the corporate world and not the most talented; it rewards bullying and not brilliance. It is no secret that the corporate ladder is cut-throat; you either destroy your competition or find yourself unemployed (or stuck in a dead end job).
  • Invidia/Envy: Those who are obsessed with their wealth also have another common feature that astonishes the rest of us who are not wealthy; they’re not satisfied with their wealth. The main reason is because someone else always has a bigger house, a bigger bank account, a bigger TV, a bigger yacht, a bigger car, and so on. Envy of others is a driving factor in our corporate world. It is what drives executives to give themselves bigger pay increases and bonuses while cutting back on their workers’ salaries. This envy, or drive to keep up with the Jonseses, is one of the major contributing factors to the economic disparity between America’s “1%” and the rest of us. It’s not that it’s wrong to be rich, but when you become rich because you want to be richer than that guy, it’s ethically wrong.
  • Superbia/Pride: The heart of all vice, the heart of all sin, is pride, and thus at heart of our economic woes is pride. It is the desire to be autonomous from God and from each other. Adam was prideful in two ways in his sin; first, he wanted to be like God (which is the source of all pride), but then he wanted to be autonomous from his responsibility to Eve and thus blamed her for his misfortune. Pride separates us from God and separates us from each other. But pride is at the center of our business culture. The desire to move up ahead of everyone else, to throw as many people under the bus as possible on the way to the top, to outclass everyone, and to never admit or learn from mistakes. The average corporate worker can live by the mantra of, “I didn’t do it…unless you liked it.” In corporate America you are expected to reap your rewards, but never own up to your own mistake. Managers take all the credit for employee’s successes  but then fire those same employees for any failure. Businesses function on pride; is it any wonder we’re in the state we’re in.

The culmination of these vices, as shown above, actually prevent companies from making a real profit. While they can have some short-term gains, there is no longterm security. Eventually, the bigger the company becomes, the more a company engages in vice, the less money the company makes. This is why our biggest corporations rely on government subsidies; left on their own, they would collapse, and in so doing they would bring the economy down with them.

An economy that is run on the profit motive appears to be the popular kid in high school. Everyone wants to be like him, everyone wants to follow him. Years later, however, we see that this popular kid has done nothing with his life and has grown fat and bald, but even after seeing this we still want to be like him. So much so that we end up giving him money to help him lose weight, but instead he uses this money on alcohol and more food. He actually becomes fatter. He becomes so fat that we can no longer get him to leave our house. When we threaten to cut him off, he says that he’ll have to leave the house, which of course will require the house to be torn down on one side just so he can exit. Thus, we are stuck paying for him, hoping he’ll use our money to benefit himself, but in the end he just becomes bigger and bigger.

While funny to imagine, this is the sad state of the US economy. In looking to greed and profit motive, we’ve actually created businesses that don’t generate a real profit, but display a profit because the taxpayer aids the company. They’ve become so large that we cannot let them fail (in theory) otherwise everyone would suffer.

The Alternatives

Before moving on to an answer, it is appropriate to look at the alternatives to the above. Perhaps, some would argue, that the problem isn’t necessarily ethical, but in how our economy is structured. Thus, the problem is not enough government and the answer is more government (socialism) or the problem is too much government and thus the answer is less government (capitalism). I will seek to show how each view ignores the deeper issue and both still start from a faulty ethical view.

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3 thoughts on “Virtue Capitalism: The Current Problem of Profit Motive or, Using Vice to Make Money

  1. Well, I think that you have posted something that for the most part we are in sync with and agree. I still caution you to scale back a bit on broad and sweeping indictments against all, but nonetheless, I truly think you are on to something here. I would point out however in a couple of your analogies, under the paragraph of Vices, lust and envy; there I think you have made a couple of oversights that in my opinion, would fit even more with your observations.

    You write that there is an intense desire for money and pride, greater than all of this Joel and what drives the desire for the money and pride is the overwhelming desire for power. Power is the ultimate business aphrodisiac for many (not all) who are wealthy. The power is what allows them to gain more wealth through influence, brow-beating, pressure, demands and much more. They use the power to manipulate their subordinates, their competition, and government officials (this one far too often). The power enables them to grow the business well beyond what would normally be a standard growth cycle (outside of traditional supply and demand, iPhone, i Pads, Microsoft, etc). Bill Gates does not strike me as one seeking power, Warren Buffet does as does Mark Zuckerberg. Again, the power is ultimately the driving force behind the greed, the unethical treatment of others and wealth.

    The other area that I think is illustrated better than purely discussing envy, is satisfaction. I am sure through additional writings and postings in this series you will or planned to cover this. Satisfaction or lack thereof is a far greater sinful condition than envy. Envy says “I want more, I want what you have”, just as you say. But what drives the envy? Just as power drives for wealth and creates more wealth (unfortunately), it is the emptiness that everything is not enough. That gets into the whole and real issues of the lives of the the “majority of the wealthy (see, not lumping all together). The spiritual void in ones life is what drives envy. This of course is not relegated only to the wealthy, one could say the same for a drug addict who is trying to fill a void or escape a loneliness. But, for the sake of this article, let’s stick with the wealthy. Why is it that percentage wise, the wealthy or affluent are prone to commit suicide more often than the “common man”? Because the big house or houses, the boats, the private jets, the Italian Villas, the private Islands, none of this can fill or satisfy the spiritual void. Why? Because everyone knows, life on earth is not eternal and at some point and time, they will lose all the earthly stuff they have accumulated, left to arguing kids and relatives, the government wanting their fair share, etc. They at some point realize that they are not “eternal” and while they may live a life of getting while the getting is good, they know there is an end and they don’t know the future. That makes them very, very poor people….. they have no hope!

    You know I love telling the story of Arthur DeMoss. What was his desire, to attain wealth. But that desire was driven by what he wanted to do with that wealth. Along the way, while treating everyone fair, and right and with dignity, he amassed billions of dollars. Yet in his story, it wasn’t his billions that tripped his trigger, it was what he was getting the chance to do with those billions that was his satisfaction. We now have the Arthur De Moss Foundation that is focused on Kingdom issues especially the pro-life efforts. His was not one of amassing “stuff” but to leave behind a godly legacy. Compare his legacy to that of the Kennedy’s. Father Joe made his money bootlegging from Canada. His was a desire for wealth and power. What is his legacy? Bootlegger, Oldest son killed in WWII, son John became President and was a womanizer to later being assassinated, son Robert, aspiring to be President who also was assassinated. Son Ted who also wanted to be President who killed a woman in a drunk driving accident, was caught up in scandals, a Senator who ultimately dies a slow agonizing death. A grandson who was killed in a plane crash, a grandson caught up in a rape case and so much more. Through all his wealth (illegally gained or not) and all the power the family amassed, don’t think for one second that if he could do it all over again he would do anything to trade places with Arthur DeMoss and his legacy.

    Joel, I stress this only to say that your writing on this is dead on spot and I hope that it is leading to what I have stressed above; the drive for power, wealth, fame, pride, greed mistreatment of employees; all of this is because of spiritual void, a disconnect of the things that are pure, noble, righteous and good. Stay on this, keep writing in this series but please wrap it up to and call it what it really is, lostness and spiritually dead. Thanks for allowing me to make a small point.

  2. Joel, you paint with too broad of a brush. While some of what you charge is true, not every publicly traded company acts like Walmart and not all, not even most CEO’s are the moral dolts you seem to think they are. Look into the Conscience or Cause Capitalism, B Corps and other similar movements and you might be surprised at how things are changing and changing for better.

    Your tone strikes me as coming from the 99% anarchist movement not from where I know your heart and spirit lie.

  3. I’m not seeing where I took a broad-brush mentality to anything. If you look at the biggest corporations in America, they are all bastions of immorality. That is not to say that all CEOs or all corporations are immoral, simply that the biggest ones are immoral and corrupt, highly so. Look at the top ten companies in the Fortune 500 and you’ll see absolute corruption in all of them. While every business will have some sort of vice within it, the biggest corporations in America rely on vice, whether in business practices, corporate advancement, or both.

    After all, while I picked on WalMart (who is the biggest corporation in America), I could just as easily pointed to General Electric, General Motors, ExxonMobile, Ford, Apple, or any other company on the list. In fact, of the Top 10 Fortune 500 companies, only Apple is sustainable without government support and subsidies. But then again, they’re famous for their use of slave labor over in China, labor that’s so bad that the Foxconn plant in China had to install nets around the building to prevent workers from jumping to their deaths from the roof.

    One could even argue that the vast majority of corporations and businesses in the United States are moving away from horrible business practices (which isn’t true), but it wouldn’t change the fact that the biggest businesses are getting worse and worse. The disparity between the average worker and the average CEO pay is getting wider, not narrower. The problem with that, of course, is that the wider the gap, the more strain is placed on the middle class, which lowers economic mobility, which sends more people into poverty, which then makes liberty a more difficult prospect. The root cause of the problem is not political by nature, but moral. It’s that some people are never content with what they make or simply do not appreciate the work that others put into their company.

    Again, it could be that 80% of the businesses in America are moving toward a more ethical practice, but the biggest corporations are not. And that poses a threat not only to our economy, but to our liberty. Big business is just as dangerous as big government and when the two work together you end up with cronyism, which is what we have now.

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